metro cash n carry

Member of METRO Group1

METRO Cash & Carry Indian Success Stories

Harsh Bahadur

Managing Director


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

Agenda


• 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

Status of Supply Chain in India

1 Status Of Supply Chain in 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.

Introduction to METRO Cash & Carry, India

2 Introduction to Metro Cash & Carry


• 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

Introduction to METRO Cash & Carry, India

2 Introduction to Metro Cash & Carry


• 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.

Success Story #1 – Shoes

3 Success Story #1


• 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%.

Success Story #1 – Shoes …

3 Success Story #1


•A direct marketing link between SME and specific needs of a sectionof 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.

Success Story #1 Shoes…IMPACT

3 Success Story #1


• 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

Success Story #2 – Fruit Juice

4 Success Story #2


• 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.

Success Story #2 – Fruit JuiceIMPACT

4 Success Story #2


• 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.

Success Story #2 – Fruit JuiceIMPACT

4 Success Story #2


Background

• Were importing pork from Australia

Expensive

High stock because of lead time for import

Uncertainty of supplies

Success Story # 3 – A Renowned 5 Star Hotel

5 Success Story #3


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.

Success Story # 3 – A Renowned 5 Star Hotel …

5 Success Story #3


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.

Success Story # 3 –A Renowned 5 Star Hotel …

5 Success Story #3


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.

Success Story # 3 –A Renowned 5 Star Hotel …

5 Success Story #3


• 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.

Organised Supply Chain PlayerInitial Impact

6 Organised Supply Chain Player


• 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

Organised Supply Chain PlayerPossible Further Impacts

6 Organised Supply Chain Player


• 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

Organised Supply Chain PlayerPolicy Imperatives

metro cash n carry

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