Analyse how retail giants Walmart and Carrefour and have made use of technology, people and processes to achieve supply-chain integration.
Supply-chain integration allows for the optimization of internal and external processes, while simultaneously leveraging process synchronization to deliver a quality customer benefits package. IT allows for a more stream-lined supply-chain through better co-ordination. This eliminates the need for buffers of inventory and drives down costs
EDI maps documentation which converts it into a standardized format and sends it to the other company which will act on the information received. Wal-Mart and Carrefour use these systems to exchange information such as shipping schedules, product availability, purchasing orders, and invoices these documents are all standardized through the system
View of the supply chain as a complete picture from the planning to the replenishment stage.Wal-Mart demands that their suppliers follow specific procedures and install special information systems that enable them to trade with Wal-Mart, these stringent procedures are implemented in order to maintain low operational cost.All suppliers are required to exchange business documents using an electronic data interchange
VMI is used to manage the relationship and information flow with suppliers. The technology has improved supply-chain efficiency by reducing stock levels and transport costsBoth retailors have collaborative partnerships with big manufacturers such as Unilever and Proctor&Gamble; these partnerships use EDI, ABC(Activity based costing) and VMI to benefit from customized goods and JIT delivery
Differences linked with each retailers strategy / competitive advantage
Enables quicker, more accurate pallet tracking and better traceability of goods.Creates efficiencies in both the warehouse management and distribution management process by reducing labour costs, facilitating knowledge sharing, and ensuring data is accurate and timely.RFID allows warehouse information to be integrated into the company’s ERP system and allows from paperless online communication between operations and other company staff. This technology is expected to have saved Wal-Mart over eight billion dollars by streamlining logistical and operating cost in the warehouse.
Walmart performs cross-docking on 85% of the goods sold. Carrefour uses this process to be able to supply both local and international marketsCross-docking reduces the time that goods are stored in warehouses – therefore reducing inventory storage costs.Goods are received, sorted and then shipped-within as short as possible period of time; if co-ordination between suppliers, retailers and distributors are good, then products can flow through the supply-chain without incurring holding costs.**Just mention the types of cross-docking, don’t go into detail**Opportunistic cross docking: This process helps to minimize or eliminate storage of products before shipping. If management has specific information about the product and where it needs to be shipped the goods can be shipped directly to the retail customer without going through storage.Flow through cross docking: This process is best suited for perishable items or items that are difficult to store, there is a continuous inflow an outflow of goods in this type of cross docking. Pre- allocated Cross docking: Goods are packaged and labelled from the manufacturing site and ready to be sent directly to the customer from the distribution centre.Manufacturing Cross docking: This is a type of cross docking specifically for manufacturers, the cross docking facilities keep parts for some of the manufactured products and the manufacturer needed parts to manufacture and the supplier would deliver it directly to the manufacturer as needed. Distributor Cross-Docking: This type of cross docking is best suited for retailers Who have large distribution networks and who need goods transported quickly.The goods are delivered from the manufacturer directly to the retailer, reducing storage cost.
From this analysis the following core management issues were identified:
Carrefours performance scorecard for Unilever: has KPI’s such as out-of-stock days, product availability, lead-times etcRegular audits conducted: ensure suppliers maintain the required standard of quality, safe workplace practice and sustainable operations Performance is also monitored to ensure the goals of the suppliers and distributors is aligned with the retailers strategic objectives
An on-call system enables suppliers and retailers to communicate directly with the quality department if there are product issues. The quality department works directly with supply-chain managers to stop the product from flowing through the supply-chain. A crisis team is then setup to manage the withdrawal of the defective product from all stores.
Apart from the general source, make and distribute processes, this analysis found that the following critical components were required for the design of a global supply-chain to enable internationalization in todays competitive business environment.
Brief background Walmart Carrefour - 15 countries - Largest retailer in Europe and - Impressive network of suppliers the second largest retailer in the Key Facts => 6000 factories located mainly world in China - 480.000 employees - 2.100.000 employees Providing low-cost and Be the preferred retailer in the Strategy standardized goods to consumers. every region in which it operates. Technological Superiority Operating globaly acting locally - Long-term relationships with its - Knowing and serving theirCompetitive global suppliers customers better with quality, Advantage - Empowering employees with customized offerings. advanced technology in the - Fast follower in terms of business process technology
Supply chain analysis - Carrefour Focused on customer needs Not as cost conscious as Walmart Focussed on efficient globally adaptable processes Shorten the supply-chain by bypassing intermediaries Develop local products purchasing from local suppliers and selling private labels => Please authorities + meet customers’ needs
Procurement process – Common featuresElectronic data interlinking technology (EDI) Exchange business directly without any human intervention Documents are all standardized through the system
Procurement process – Common featuresCollaborative Planning Forecasting and replenishment Improve demand anticipation and enable more realistic planning
Procurement process – Common featuresVendor managed inventory (VMI) Improvement supply-chain efficiency by: - Reducing stock levels and transport costs - Improving service levels - Sharing inventory related risksB2B Collaboration Build collaborative partnerships with suppliers and reap the benefits of customized on-time delivery through EDI, ABC and JIT delivery
Procurement – Walmart vs. CarrefourWalmart - Supplier Operational Procedures Supplier management strategy based on driving down costs Standard protocols for the introduction and management of new vendors Suppliers are evaluated to ensure that they are operating within the Wal-Mart guidelinesCarrefour - Procurement Centres Regional procurement centres => Managers place orders for local goods in line with the company’s strategy of customization
Warehouse Management: Walmart vs CarrefourWarehouse management systems (WMS) Control the movement and storage of materials Enhanced by standardized packaging & smaller standardized pallets Benefits: - Ability to utilize space better - Reduce stock levels while increasing SKU variety - Ensure accuracy of inventory management - Respond quicker to changing customer needs - Eliminate the risk of stock-shortages
Warehouse ManagementRFID Technology Enables a more accurate pallet tracking & traceability of goods Integrates warehouse information into the ERP system Reduces labour costs and facilitates knowledge sharing
Warehouse ManagementCross Docking Logistical practice that cuts down warehouse costs and increases firm responsiveness to customer needs
Distribution ProcessWalmart 3500 self owned trucks Latest tracking equipments Multi-channel distribution strategyCarrefour - Third-party Logistics (3PL) and consolidation centres Various ways of transporataion Provide 3PL vendors with dashboards The Generix group provides this collaborative solution
Core Management Issues - Going Green Reuse: • Transportation • Pallets Constant Employee TrainingRecycle: Reduce:• Reverse • Green Transportation Logistics • Zero Waste Tolerance • Emissions • Carbon Footprint
Core Management IssuesEnsuring ethical business practice throughout the supply-chain Business processes/interactions guided by global anti-corruption policies A global ethics officerMaintaining sustainable operations downstream and upstream Operational activities guided by zero waste, the use of renewable energy Suppliers and distributors are offered assistance to make their operations compliant Innovative technology to cut emissionsEnsuring consistency and efficiency in operational activities Compliance with global best practice standards such as ITIL, ISO14001, COBIT, EDI and CPFR SOPS are in place and updated regularly Processes are standardized; e.g. standard packaging and pallets are used
Core Management IssuesPerformance management Regular audits conducted: ensure suppliers maintain the required standards Performance is monitored to ensure the goals of the suppliers and distributors is aligned with the retailers strategic objectives Carrefour’s performance score-card for Unilever
Core Management IssuesContinuous improvement Staff is trained on an on-going basis to ensure they are up-to-date with best practice within the industry e.g. the latest food standardsProduct safety and Quality Regular audits are conducted to ensure products conform to the global safety and quality standards Both retailers make use of lean six sigma
Core Management IssuesFast and efficient product removal – design for TRACEABILITY On-call system enables suppliers and retailers to communicate directly with the quality department Quality department works directly with supply-chain managers Crisis team is setup to manage the withdrawal of the defective product
ConclusionA supply-chain that enables internationalization requires: Supply chain integration and flow logistics Risk Sharing and collaboration Strategic alliances Performance monitoring Sustainable operations and practices Adherence to global standards Training Reverse Logistics (traceability)The successful implementation of these processes is dependent ontechnology, the training and buy-in of all people involved and adherence toglobal standards and best-practices.
ConclusionGlobal supply chain management is a beautiful, beautiful thing! Questions?