CARREFOUR SUPPLY CHAIN STUDY CASE

Student’s NameInstitutional Affiliation

2Healthcare ManagementCapstone

Introduction

Carrefour is the name of big retailer company, which is based in Boulogne Billancourt, France. According to statistics, this company is said to be among the five largest companies in the world. The other retail companies that can be compared to it in terms of the amount of goods turnover include Wall-Mart, Costco and Tesco. In fact, the company is rated third globally with reference to the profits derived. Some of the major countries that the company operates in include: China, Argentina, Brazil and the UAE. The company was chosen for the analysis due to its size which makes it easier to analyze.

Supply Chain and Logistics

As mentioned above, Carrefour has a chain of hypermarkets in China and India. Company hypermarkets in India operate as cash and carry stores because India does not allow multi-brand retail stores unless they are cash and carry. The company also has less number of stores in Pakistan (currently, a few stores are being built on the territory of the country) and some regions of Japan. (Bowersox & Closs, 2007).

Entrance of the company into European market has also proved to be a success. In Albania, the company operates both importing products and selling local products in order to promote local industries. In Austria, Carrefour own only one store in the Shopping city Sudd. The company also operates in Belgium where it has established alliances with the GB group. Additionally, Carrefour has 5 hypermarkets and three supermarkets in Bulgaria which were built in collaboration with

CARREFOUR SUPPLY CHAIN STUDY CASE

3Healthcare ManagementCapstone

Marinopoulos group, the largest retail group in Greece. Further, the company has two stores in Georgia, namely, in Skopje. However, poor performance made the company to sell its share in Portuguese business to local company Sonae. Most of the stores in the United Kingdom were also sold to other companies which required a change in names, although some of the Carrefour products are sold through other stores. Finally, the company is much more successful in Romania, being the largest retailer in the country. (Basu, 2011). In the Middle East and Africa, Carrefour runs its stores in Kuwait, Bahrain, Lebanon and Saudi Arabia, where it has several outlets. Morocco is one of the two African countries into which Carrefour has managed to venture. Here, the company has a considerable number of outlets. The other African country is Egypt, where the company has more than 15 stores. The company runs its outlets in the United Arab Emirates in collaboration with Majid Al Futtaim. Brazil is the main country in South America, where Carrefour sells about 25million products every year which accounts for the largest part of the company profits in the country. However, it faces tough competition with Wall-Mart.

Extended company logistics can be generalized, in a bid to give a view of the flow of goods, services, information and finances in the company. First, the flow of information in the company is enabled by extensive use of technology (Bowersox & Closs, 2007). Communication between company employees is done through emails and phone calls. Company website is mainly used for delivering information and communication with the company customers. With the world turning into a global village, the choice of such means of communication seems the most relevant.

4Healthcare ManagementCapstone

Carrefour imports goods in bulk using waterways. As a retailer, Carrefour also deals with highly perishable goods . For this, the company has specific warehousing to ensure that the goods do not spoil during transportation or storage while awaiting the actual sale. Also, the company has security systems put in place to ensure that all the goods are secure and general storage external conditions are kept.

The main drivers of change in the company are competition and technology. Since rival companies, such as Wall-Mart are also trying to enter the market, Carrefour has been forced to make significant changes to quality of their goods and services, while trying to lower the prices that may entice the customers. Respectively, Carrefour has lost its market positions in countries where it has been unable to maintain a balance between the two. Companies such as Wall-Mart have been known to offer predatory prices in the market, thus, forcing out their competitors from the market. This approach of Wall-Mart poses a huge problem for Carrefour. In order to enhance performance and preserve its marketability, Carrefour introduced significant changes in its means of technology used in the company activities such as advertising, communication, storage, transportation and many other vital aspects of the company supply chain (Bowersox & Closs, 2007).

Sourcing and Supply Management

Being a retail company, Carrefour deals with a wide range of business operations. The company sells electronics, such as television sets, radios, phones and accessories among others in most of its outlets. It is also involved in the fashion industry selling trendy goods to its customers around the world. These include: clothes, shoes etc. . Some other products offered by the company include beverages, grocery

5Healthcare ManagementCapstone

products, ornaments, perfumes, furniture, window blinds, vegetables, organic products and fruit among others (Chopra & Meindl, 2007).

Carrefour provides a wide range of products in the UAE. However, in terms of analysis of the company logistics, focus on one product seems more helpful. RT-Mart is one of the company suppliers of leather in China. The relationship with this retailer is well established to the extent that some of the goods are offered on credit. However, there is a need for the company to think of more efficient ways of delivering products to the company. Upon any order, the raw materials are packed and transported using suitable means, to ensure that the leather does not deteriorate. The original package always contains the stamp of RT-Mart. It has to reach Carrefour in a sealed form. On the reception of the product, a notification is sent to RT-Mart. Afterwards, the payment is done at the agreed time (Chopra & Meindl, 2007).

Customer Service and Demand Management

Delivery of products to consumers depends on location between the point of production to the point of distribution or consumption. Generally, the company uses road, rail, water and air transport in performing deliveries of its products. For perishable goods, such as flowers, fruits and vegetables, air transport is used aided by suitable storage means. For overseas transport of bulky products, water transport is used, where ships can carry numerous goods at a go. Customer service should involve provision of high quality goods. Above that, there is a great importance in having direct relationship with customers. Carrefour trains its employees to treat all customers with respect, in order to make them feel comfortable. The company is also able to receive reviews from different customers after they have made

6Healthcare ManagementCapstone

their sales at the stores. However, there is no special way in which they collect customer responses (Basu, 2011).

However, the company can improve its services through the use of technology. Currently, there are numerous social networks offering different ways of communication. Since the company has outlets all around the world, it would be hard to obtain all the reviews from all the outlets. Therefore, the company should use social networks to gather the most of reviews from its customers around the world. This method is fast and allows customers using it in the comfort of their places of residence (Basu, 2011).

Order Management and Ful�llment

In Carrefour, order management is carried out through the use of an order management system. This refers to a software system used for entering and and processing orders. This system enables keeping track of the stock level maintenance, customer orders, packaging and shipping. Additionally, this software makes the process of order fulfillment easier since the company is able to keep track of all orders and respond to them appropriately. In case the company runs out of a certain product, necessary adjustments are made to ensure that the product is replaced. The customers are just required to wait for some extra time before they receive the products they ordered. However, the customers are encouraged to place their orders in time to avoid delivery inconveniences (Gattorna, 2009).

Inventory Management

Inventory management is another important factor in the supply chain

7Healthcare ManagementCapstone

of the company. There are many aspects of inventory management, in which Carrefour is involved in. First, aspect refers to inventory valuation which enables Carrefour to carry out a valuation for all the stock in the company at any particular time and forecast future inventory prices. Hence, inventory valuation is a tool which allows the company to foretell the future value of stock, according to the existing market and expert projections. The other aspect is the available physical space for inventory. In order to avoid improper storage the company has to find the adequate space for the stock. Carrying cost inventory monitors the cost of transporting stock to the company storage facilities. The company classifies its inventory according to the types of goods. For example, electronics is classified separately, that is where television sets, DVD players, radios and other electronics are placed (Mensah, 2010).

The EOQ (Economic Order Quantity) of Carrefour is well designed to ensure that inventory and ordering costs are minimized. The components of Carrefour EOQ model include constant ordering cost, evenly spread demand rate, exclusive handling of individual products and constant prices. The company struggles to ensure that the above mentioned factors are constant, in a bid to minimize all the costs. For example, Carrefour prefers dealing with orders. This means that it transports goods after customers have ordered them. This way, they the company unloads all stock so as to avoid extra storage cost (Gattorna, 2009).

Transportation Management

A logistics and supply chain manager for Carrefour, has to take a number of decisions regarding transportation of specific goods. For

8Healthcare ManagementCapstone

example, the company may be willing to transport fruits into the UAE. The first consideration would be the nature of these products. For durable products, such as cement, one can use slow means of transport. However, fruits are highly perishable. Therefore, faster means have to be used. The distance from the point of production also affects the decision on the mode of transport. The other factor to consider would be the cost of the mode of transport. This cost has to be lower than the profit derived from selling the product. Lastly, urgency of the product is to be considered. Normally, urgently needed goods cost higher. Therefore, a faster means of transport would be appropriate. Considering all these factors, air transport would be the most appropriate solution since fruits in the UAE are expensive and fetch higher profits that most other products (Basu, 2011).

As mentioned above, Carrefour uses all modes of transportation in delivering its goods. The blue sections in the picture below, taken from the company website, shows the areas in which the company operates. From the picture it is evident that the company operates in most countries of the world. Therefore, for better performance, it has to include all the forms of transportation. However, the choice of the best means of transportation is determined by the factors stated above. Finally, the company is able to measure effectiveness of the modes of transportation by means of inventory fulfillment (Gattorna, 2009).

Distribution Management

Company distribution plan ensures that all the outlets receive the products in time and in the right amount. When necessary, the company may use cross-docking. For example, different shipments from different locations might be loaded together into the same trucks

9Healthcare ManagementCapstone

for further delivery. Nevertheless, the company ensures that verification is done and that similar products are transported together. All Carrefour retail outlets have warehouses located in the basement floors of the buildings. The warehouses are used for for storage of goods or keeping the goods there to increase in value. For example, bananas can be stored in order to ripen, this increases their value while in the warehouses. Packaging is another essential aspect in this company. (Gattorna, 2009).

Supply Chain Relationships and Outsourcing

Carrefour has numerous supply chain relationships in different countries of its operation. In the countries where market penetration is difficult, the company performs in collaboration with other companies in order to create supply chain and share the costs of production. The company deals with other companies in a manner of transactional relationship. That is it relates with other companies in the actual process of delivery of goods to the consumers. For example, in Belgium, the company partners with GB group to supply goods and services to the consumers. Carrefour has the advantage of adequate resources while GB group has the advantage of knowledge of the market. The other form of relationship practiced by the company is strategic relationship which entails entering into a partnership with a rival company. For example, Carrefour partners with Majid Al Futtaim in the UAE market. Since there are many competitors, the company had to partner with a brand that was well known in the UAE. With the supply chains, every partner draws income according to his input, and the agreements made at the moment of establishing partnership. The advantage of such kind of partnership for Carrefour is that it outsources labor from the local companies with which it partners. (New, 2004).

10Healthcare ManagementCapstone

Supply Chain Performance Measurement

The supply chain performance measurement is done through various ways. The first objective to be considered in this regard is the profit margins. A higher profit margin can be used to indicate that the supply chain was not highly priced. However, this ration cannot be taken as the exclusive means of measurement. Inventory fulfillment provides another tool for estimating efficiency of the supply chain performance. This tool allows the company to gauge the amount of products that were availed to the customers in time. Carrefour ensures that it keeps these records to measure customer satisfaction. It should also be mentioned that most of the company relationships that it has with its partners are long lasting which directly translates to success of the company (Chopra & Meindl, 2007).

Strategies for Logistics and Supply Chain Management

In supply chain management Carrefour follows a set of established rules. First, it only forms collaborations when they are necessary. This ensures that it does not lose its originality along with the customers in particular area of operation. In addition, the company ensures that the supply chain bears the lowest cost possible, without the loss of quality of the products. In this regard the company resorts to a strategy of differentiation which entails selling similar products in a wide range of alternatives. The approach allows covering wider markets and serving more customers. The company shares most of its information via its website Lastly, Carrefour ensures that it has a good relationship with its partners which translates into long-lasting mutual benefits for both parties. (Bowersox & Closs, 2007).

11Healthcare ManagementCapstone

Basu, R. (2011). Managing project supply chains. Farnham: Gower.

Bowersox, D., & Closs, D. (2007). Supply chain logistics management (2nd ed.). Boston, Mass.: Mcgraw-Hill/Irwin.

Chopra, S., & Meindl, P. (2007). Supply chain management: Strategy, planning, and operation (3rd ed.). Upper Saddle River, N.J.: Pearson Prentice Hall.

Gattorna, J. (2009). Dynamic supply chain alignment a new business model for peak performance in enterprise supply chains across all geographies. Farnham, UK: Gower.

Mensah, S. (2010). Globalized supply chains and U.S. policy. New York: Nova Science.

New, S. (2004). Understanding supply chains concepts, critiques, and futures. Oxford: Oxford University Press.

References