Metro Cash N Carry
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METRO Cash & Carry Indian Success Stories Harsh Bahadur Managing Director
Member of METRO Group
1
Agenda
Status of Supply Chain in India Introduction to METRO Cash & Carry, India Success Story # 1 – Non-food Success Story # 2 – Food Success Story # 3 – Corporate buyer Organised Supply Chain Player
Member of METRO Group
2
1
Status Of Supply Chain in India
Status of Supply Chain in India •
The Indian wholesale / retail system is fragmented and lengthy.
•
The distribution system, which worked well at lower growth rates in a “Shortage Economy”, now needs to be mordernised in terms of Structure Infrastructure
•
The supply chain is ‘uni-dimensional’ with one-size-fits-all backend.
•
Modern supply chain structures and systems imperative for rapid economic growth.
•
Current supply chain creates wastages and adds costs.
•
Small and medium enterprises have difficulty in getting – Sensibly priced inputs – Distribution and marketing muscle
Member of METRO Group
3
2
Introduction to Metro Cash & Carry
Introduction to METRO Cash & Carry, India •
METRO sees great opportunity in India for its Supply Chain Model.
•
Earlier success in organising modern supply chains in China, Vietnam and Eastern Europe lends confidence.
•
METRO Cash & Carry operations were started in October 2003 2 Distribution Centres in Bangalore. Investment of over Rs.200 crores (USD 43 million). 220,000 SqFt (40,000 SqFt temperature controlled). 18,000 food and non-food items.
Member of METRO Group
4
2
Introduction to Metro Cash & Carry
Introduction to METRO Cash & Carry, India •
Targeted at and open only to business customers.
•
Even as just our first anniversary comes up next month, there have been some early notable successes.
•
Three success stories relating to commonly used products, depicting various facets of Supply chain, will be shared :
Shoes Fruit juice Pork
Member of METRO Group
5
3 Success Story #1
Success Story #1 – Shoes •
Market study revealed a definite need amongst small businesses for decent looking shoes at affordable prices - uniforms.
•
Studied the characteristics that would need to be fulfilled.
•
METRO worked with an unbranded shoe manufacturer in Agra. – Helped design appropriate basic footwear – Sells at a never before price of Rs. 199/-
•
Helped to make his supply chain more efficient.
Member of METRO Group
6
3 Success Story #1
Success Story #1 – Shoes … •
The shoe manufacturer was a small scale industrialist.
•
Turnover of previous year (pre-METRO) Rs 4.5 Crores (USD 1 million).
•
Turnover after dealing with METRO Rs 6 Cr (USD 1.3 m), an increase of 33% with Rs 1.1 Cr (USD 0.25 m) coming from just METRO – and the relationship is barely 10 months old.
•
Costs of production reduced by 5%.
•
Profitability increased from 8% to over 12%.
Member of METRO Group
7
3 Success Story #1
Success Story #1 Shoes… IMPACT •A direct marketing link between SME and specific needs of a section of business customers. •An ability for SME to organise their production and supply chain better as most of the uncertainty and many costs taken out of their system. •Improved distribution amongst shoe retailers. •Getting better educated in a management sense enabling:
Management systems to become better. Setting up sample production centre. Improving the Packaging tremendously. Develop the ability to deal with some customers who were not approachable in the past.
Member of METRO Group
8
4 Success Story #2
Success Story #2 – Fruit Juice •
This Bangalore based SSI manufacturer produced bottled fruit juices, with some bulk sales.
•
His price was at a 28% discount over established players ….. and yet – He did not have the distribution channel or the marketing muscle to make an impact in the market place.
•
Given the profile of METRO’s customers like HoReCa & B&C class Retailers, we saw an opportunity to promote a “budget”priced juice brand.
•
METRO worked with him to upgrade his Quality and Packaging (Tetrapak). Result – Good quality juices being sold at affordable prices
Member of METRO Group
9
4 Success Story #2
Success Story #2 – Fruit Juice IMPACT •
Turn over before Metro Rs 6 Lacs per month, went up to Rs 11 Lacs per month – a whopping 83% increase.
•
Kept prices at same low levels even after making sizeable investments in Tetrapak.
•
Diversified into non-traditional juices.
Member of METRO Group
10
4 Success Story #2
Success Story #2 – Fruit Juice IMPACT •
METRO provided a crucial distribution outlet.
•
SME Manufacturer able to survive and prosper.
•
Affordable prices, encourage consumption of healthy beverage.
•
B & C category retailers have increased sales.
•
HoReCa have reduced input costs.
•
Farmers now have an alternate shelf-life extending route to sell his produce, thereby getting better price realisation.
Member of METRO Group
11
5 Success Story #3
Success Story # 3 – A Renowned 5 Star Hotel Background •
Were importing pork from Australia
Expensive
High stock because of lead time for import
Uncertainty of supplies
Member of METRO Group
12
5 Success Story #3
Success Story # 3 – A Renowned 5 Star Hotel … METRO’s intervention •
Studied current practices of the pork industry.
•
Identified areas for improvement and worked with selected piggeries. • • • • • • •
•
Breed Feed Hygiene / Veterinary care Slaughter Preservation Transport Storage
Worked with the hotel to get local product acceptance.
Member of METRO Group
13
5 Success Story #3
Success Story # 3 – A Renowned 5 Star Hotel … Current status •
The hotel approved METRO’s pork products for its Bangalore outfit.
•
After satisfying itself, discontinued Australian imports and switched to METRO’s pork for all India requirements.
•
Based on ongoing dialogue and study, customer has made changes to the logistics.
Member of METRO Group
14
5 Success Story #3
Success Story # 3 – A Renowned 5 Star Hotel … IMPACT •
International standards of hygiene and food safety introduced and disseminated.
•
Lower costs for large HoReCa Customers.
•
Larger market for small farmers.
•
Import substitution – possible export opportunity.
Member of METRO Group
15
6
Organised Supply Chain Player
Organised Supply Chain Player Initial Impact •
Direct linkages between customer and producer – both food and non food.
•
Enhanced distribution reach, especially for SMEs and Farmers.
•
SMEs benefit from reduction in supply chain costs (both inputs and distribution).
•
SMEs benefit from access to technology and systems.
•
Improvement in general level of quality (food and non-food), hygiene and food safety. Member of METRO Group
16
6
Organised Supply Chain Player
Organised Supply Chain Player Possible Further Impacts •
Major improvements in agricultural supply chain possible – Metro’s international experience
Reduction in wastage : Better realisation for farmers : Lower consumer Prices
De-layering of chain will reduce costs – Margins – Transaction Costs – Transportation
Member of METRO Group
17
Organised Supply Chain Player Policy Imperatives •
•
Devise policies that:
Encourage diversification of supply chains
Encourage consolidation and de-layering
Encourage creation of supply chain infrastructure
Specific focus areas Agricultural marketing – Repeal / major modification of APMC Acts needed urgently
Adoption of international supply chain models – Warehousing – Wholesale Trading – Retail
Member of METRO Group
18
Member of METRO Group
19
Member of METRO Group
1
Agenda
Status of Supply Chain in India Introduction to METRO Cash & Carry, India Success Story # 1 – Non-food Success Story # 2 – Food Success Story # 3 – Corporate buyer Organised Supply Chain Player
Member of METRO Group
2
1
Status Of Supply Chain in India
Status of Supply Chain in India •
The Indian wholesale / retail system is fragmented and lengthy.
•
The distribution system, which worked well at lower growth rates in a “Shortage Economy”, now needs to be mordernised in terms of Structure Infrastructure
•
The supply chain is ‘uni-dimensional’ with one-size-fits-all backend.
•
Modern supply chain structures and systems imperative for rapid economic growth.
•
Current supply chain creates wastages and adds costs.
•
Small and medium enterprises have difficulty in getting – Sensibly priced inputs – Distribution and marketing muscle
Member of METRO Group
3
2
Introduction to Metro Cash & Carry
Introduction to METRO Cash & Carry, India •
METRO sees great opportunity in India for its Supply Chain Model.
•
Earlier success in organising modern supply chains in China, Vietnam and Eastern Europe lends confidence.
•
METRO Cash & Carry operations were started in October 2003 2 Distribution Centres in Bangalore. Investment of over Rs.200 crores (USD 43 million). 220,000 SqFt (40,000 SqFt temperature controlled). 18,000 food and non-food items.
Member of METRO Group
4
2
Introduction to Metro Cash & Carry
Introduction to METRO Cash & Carry, India •
Targeted at and open only to business customers.
•
Even as just our first anniversary comes up next month, there have been some early notable successes.
•
Three success stories relating to commonly used products, depicting various facets of Supply chain, will be shared :
Shoes Fruit juice Pork
Member of METRO Group
5
3 Success Story #1
Success Story #1 – Shoes •
Market study revealed a definite need amongst small businesses for decent looking shoes at affordable prices - uniforms.
•
Studied the characteristics that would need to be fulfilled.
•
METRO worked with an unbranded shoe manufacturer in Agra. – Helped design appropriate basic footwear – Sells at a never before price of Rs. 199/-
•
Helped to make his supply chain more efficient.
Member of METRO Group
6
3 Success Story #1
Success Story #1 – Shoes … •
The shoe manufacturer was a small scale industrialist.
•
Turnover of previous year (pre-METRO) Rs 4.5 Crores (USD 1 million).
•
Turnover after dealing with METRO Rs 6 Cr (USD 1.3 m), an increase of 33% with Rs 1.1 Cr (USD 0.25 m) coming from just METRO – and the relationship is barely 10 months old.
•
Costs of production reduced by 5%.
•
Profitability increased from 8% to over 12%.
Member of METRO Group
7
3 Success Story #1
Success Story #1 Shoes… IMPACT •A direct marketing link between SME and specific needs of a section of business customers. •An ability for SME to organise their production and supply chain better as most of the uncertainty and many costs taken out of their system. •Improved distribution amongst shoe retailers. •Getting better educated in a management sense enabling:
Management systems to become better. Setting up sample production centre. Improving the Packaging tremendously. Develop the ability to deal with some customers who were not approachable in the past.
Member of METRO Group
8
4 Success Story #2
Success Story #2 – Fruit Juice •
This Bangalore based SSI manufacturer produced bottled fruit juices, with some bulk sales.
•
His price was at a 28% discount over established players ….. and yet – He did not have the distribution channel or the marketing muscle to make an impact in the market place.
•
Given the profile of METRO’s customers like HoReCa & B&C class Retailers, we saw an opportunity to promote a “budget”priced juice brand.
•
METRO worked with him to upgrade his Quality and Packaging (Tetrapak). Result – Good quality juices being sold at affordable prices
Member of METRO Group
9
4 Success Story #2
Success Story #2 – Fruit Juice IMPACT •
Turn over before Metro Rs 6 Lacs per month, went up to Rs 11 Lacs per month – a whopping 83% increase.
•
Kept prices at same low levels even after making sizeable investments in Tetrapak.
•
Diversified into non-traditional juices.
Member of METRO Group
10
4 Success Story #2
Success Story #2 – Fruit Juice IMPACT •
METRO provided a crucial distribution outlet.
•
SME Manufacturer able to survive and prosper.
•
Affordable prices, encourage consumption of healthy beverage.
•
B & C category retailers have increased sales.
•
HoReCa have reduced input costs.
•
Farmers now have an alternate shelf-life extending route to sell his produce, thereby getting better price realisation.
Member of METRO Group
11
5 Success Story #3
Success Story # 3 – A Renowned 5 Star Hotel Background •
Were importing pork from Australia
Expensive
High stock because of lead time for import
Uncertainty of supplies
Member of METRO Group
12
5 Success Story #3
Success Story # 3 – A Renowned 5 Star Hotel … METRO’s intervention •
Studied current practices of the pork industry.
•
Identified areas for improvement and worked with selected piggeries. • • • • • • •
•
Breed Feed Hygiene / Veterinary care Slaughter Preservation Transport Storage
Worked with the hotel to get local product acceptance.
Member of METRO Group
13
5 Success Story #3
Success Story # 3 – A Renowned 5 Star Hotel … Current status •
The hotel approved METRO’s pork products for its Bangalore outfit.
•
After satisfying itself, discontinued Australian imports and switched to METRO’s pork for all India requirements.
•
Based on ongoing dialogue and study, customer has made changes to the logistics.
Member of METRO Group
14
5 Success Story #3
Success Story # 3 – A Renowned 5 Star Hotel … IMPACT •
International standards of hygiene and food safety introduced and disseminated.
•
Lower costs for large HoReCa Customers.
•
Larger market for small farmers.
•
Import substitution – possible export opportunity.
Member of METRO Group
15
6
Organised Supply Chain Player
Organised Supply Chain Player Initial Impact •
Direct linkages between customer and producer – both food and non food.
•
Enhanced distribution reach, especially for SMEs and Farmers.
•
SMEs benefit from reduction in supply chain costs (both inputs and distribution).
•
SMEs benefit from access to technology and systems.
•
Improvement in general level of quality (food and non-food), hygiene and food safety. Member of METRO Group
16
6
Organised Supply Chain Player
Organised Supply Chain Player Possible Further Impacts •
Major improvements in agricultural supply chain possible – Metro’s international experience
Reduction in wastage : Better realisation for farmers : Lower consumer Prices
De-layering of chain will reduce costs – Margins – Transaction Costs – Transportation
Member of METRO Group
17
Organised Supply Chain Player Policy Imperatives •
•
Devise policies that:
Encourage diversification of supply chains
Encourage consolidation and de-layering
Encourage creation of supply chain infrastructure
Specific focus areas Agricultural marketing – Repeal / major modification of APMC Acts needed urgently
Adoption of international supply chain models – Warehousing – Wholesale Trading – Retail
Member of METRO Group
18
Member of METRO Group
19
