Introduction
Considered the second largest retailer in the world, Carrefour’s supply chain management is vast and contains thousands of suppliers (Basu & Wright 2016). Founded in 1958, Carrefour operates more than 1,200 supermarkets and 3,245 convenience stores (Basu & Wright 2016). Its global operations span several continents, including Africa, Europe, Asia, and South America. Currently, the company employs more than 500,000 people and has annual sales in excess of €86.3 million (Basu & Wright 2016). Based on the extent of its operations and changing market dynamics, Carrefour needs to review the efficiency of its supply chain management process to make sure it responds to the needs of the organization, market, customers, and suppliers.
This paper seeks to review the operations of the French-based multinational and the role that supply chain management plays in making its operations successful. This research paper is divided into two tasks. The first one highlights the role of supply chain management and logistics, the link between the company’s structure and its supply chain functions, as well as ways to provide supply chain intelligence. The second task explores the role of supply chain relationships in the management of procurement functions and the role of technology in influencing this relationship.
Why Carrefour Needs Supply Chain Management and Logistics
As Basu and Wright (2016) observe, the supply chain functions of large multinationals, such as Carrefour, are often complex and sensitive to changing market dynamics. Therefore, the need for an efficient supply chain management is paramount. Carrefour Supermarket needs an efficient supply chain and logistics management to satisfy the demand for its goods and services. Implementing seamless logistics in the company’s operations could benefit the organization by increasing its response to its customers’ needs (Xu, Xu & Liu 2014). It could also reduce the time spent by the supermarket chain to move goods from one point to another. These advantages could increase the competitive advantage of Carrefour supermarket.
Effective supply chain management and logistics could also improve the quality standards of Carrefour because it gives managers an opportunity to determine what products they sell to their customers and the quality specifications they should have (Xu, Xu & Liu 2014). For example, the supermarket has a product line of Carrefour-branded products (Xu, Xu & Liu 2014). To safeguard its quality standards, the company makes sure that all suppliers who were approved to provide products within this business segment meet high-quality standards (Xu, Xu & Liu 2014).
Supply chain management and logistics operations are also vital to the operations of Carrefour because they could improve the company’s ability to coordinate different departmental functions (Basu & Wright 2016). For example, they could help managers to coordinate the functions of the procurement, sales, transportation, and warehousing departments. Overall, effective supply chain management creates an opportunity for management to develop a holistic understanding of the organization’s processes. This way, it is easier for the company to maximize the efficiency and effectiveness of its retail functions.
Organizational Structure of Carrefour Supermarket and its Relation with Supply Chain Functions
Carrefour’s Organizational Structure
At the helm of Carrefour’s organizational structure is the executive director in charge of merchandise and supply (Carrefour Group 2018). Under his office, five board of directors oversee the functions of five specialized departments – audit, remuneration, appointments, corporate social responsibility (CSR), and strategic (Carrefour Group 2018). The third level of organizational structure is the group executive committee, which comprises of 14 members (Carrefour Group 2018). The chairperson and group chief executive officer are among the members. Their key responsibilities include managing the company’s operations in different geographic zones, managing its group functions, and directing corporate responsibilities (Carrefour Group 2018). Figure 1 below presents the company’s organizational structure.
How the Organization Structure Works With the Supply Chain
The aforementioned organizational structure complements Carrefour’s supply chain functions by developing a centrally led supply chain system that aligns with the supermarket’s corporate goals. The centralized nature of the organizational structure makes sure that the entire supply chain is not fragmented, thereby increasing the level of collaboration among its key partners. It also facilitates the behavioral and cultural changes required in different operating regions to make supply chain management more effective and efficient.
Carrefour’s organizational structure is also instrumental to the proper functioning of the company’s supply chain plan because it provides room to leverage its corporate spend. Stated differently, it provides an opportunity for management to influence how the organization allocates its resources to support key supply chain functions. Basu and Wright (2016) explain this strategy by saying it is an innovative way for companies to manage new challenges in their supply chain functions and remain competitive in the end.
In the context of Carrefour’s operations, the organization’s management structure ensures that efforts to leverage corporate spend are primarily directed at improving the performance of strategic supply chain functions (Xu, Xu & Liu 2014). In other words, only those operations that are considered to have a high risk of supply loss are deemed the primary beneficiaries of the corporate spend strategy (Xu, Xu & Liu 2014).
Improvements through Sales Forecasting
The supply chain functions of Carrefour could be improved by following four sales forecasting steps, which are defined by Saracene (2014) as the definition of terms, clarification of sales stages, elevation of CRM as the only source of forecasting, and going beyond pipeline and bookings. The first step (definition of terms) could make all parties in the supply chain process understand key terms that define supply chain communications at Carrefour. This step is closely connected with the second part of sales forecasting, which is the clarification and communication of sales processes.
The connection comes from the fact that after defining the terms to be used in the supply chain management process, all concerned parties need to be made aware of what it would take to move from one step of the supply chain management process to another. The third step of forecasting identifies the need to model the behaviors of suppliers and third parties who are involved the company’s supply chain. This strategy could improve supplier relationships at Carrefour. After implementing this step, it would be possible for the supply chain manager of Carrefour to make accurate bookings and projections in the supply chain management.
Ways to Provide Supply Chain Intelligence
Supply chain intelligence is an important part of Carrefour’s business because it provides real-time insights regarding the performance of different aspects of the company’s supply chain. Collecting intelligence allows executives to understand which aspects of the company’s overall supply chain processes are weak or strong, thereby providing them with adequate information for making strategic decisions. Carrefour could use three ways to gather intelligence. They are outlined below.
Advanced Information Technology Management
One way to provide supply chain intelligence for Carrefour Supermarket is to embrace advanced information technology management. Such a system should engage multipurpose shops, supermarkets, and convenience shops that are within the company’s supply network (Basu & Wright 2016). At the same time, it should include the thousands of suppliers who are integrated in the company’s distribution network because it should be designed in such a manner that the company’s employees could log into the system, get goods from dispatch centers, settle outstanding accounts, and send orders to suppliers through virtual platforms (Basu & Wright 2016).
The logistics dispatch system could also be used to support long-distance communication between the company’s headquarters and its different regional branches, thereby providing real-time supply chain management support (Jue 2014).
Cooperating with Partners
For a long time, many companies have not embraced information sharing because of its perceived risk to intellectual property rights (Lotfi et al. 2013). However, as a coordinator of Carrefour’s supply chain management, I would embrace this strategy as an intelligence-gathering tool. Intelligence will be gathered through partnerships that will be fostered by seeking collaboration with different entities who are involved in Carrefour’s horizontal and vertical integration strategies. This strategy will involve distributing useful information relating to suppliers, logistics, market demand and any other issue that may affect the company’s supply chain plan.
Customer Feedback
Most supply chain management functions are intended to satisfy customer needs. Today, companies have different methods they can use to get instant feedback from customers. As a supply chain coordinator at Carrefour supermarket, I would rely on customer feedback as a source of supply chain intelligence. Negative feedback from customers would typically mean that the supply chain process needs improvement, but positive feedback would imply that the supply chain function is effective.
However, attempts have to be made to evaluate the kind of information provided by customers because some negative feedback could be related to the operations of specific stores and not necessarily the broader supply chain process that supports Carrefour’s operations. Customer feedback could be sourced from multiple sources, including social media sites, the company website, or even electronic mails sent to the company (Basu & Wright 2016).
Supplier Relationship Management (SRM)
The success of supply chain management partly depends on the creation of effective supplier relationship management (SRM) (Basu & Wright 2016). The field of SRM is primarily concerned with managing supplier relationships as a key aspect of supply chain management. Relationships built within this type of structure usually create a positive and financially productive engagement between companies and suppliers. According to Monczka et al. (2015), five kinds of relationships can be pursued with the larger SRM structure. They are transactional, contractual, value-additional, collaborative, and partnership arrangements.
As a supply chain coordinator at Carrefour Supermarket, I would pursue the transactional relationship as the main model of interaction with suppliers. This type of relationship simply refers to the exchange of goods and services within a specific time and at a certain price (Monczka et al. 2015). This type of relationship should be pursued at Carrefour because the supermarket sells many perishable products.
The transactional relationship recognizes the time-sensitive nature of the products delivered. Indeed, by agreeing on a specific price and time for delivering goods, Carrefour would reduce the risk of product write-offs. My model for a transaction relationship with the suppliers would be based on long-term relationships because my goal would be to develop trust with the suppliers. Trust could later be leveraged to improve the quality of goods and services delivered to the supermarket.
As a supply chain coordinator of Carrefour Supermarket, I would also consider a collaborative relationship with suppliers to manage the company’s expectations of service delivery and to create value in the supply chain management. Basu and Wright (2016) define a collaborative relationship as that which is premised on the need to add value to products and to mutually benefit suppliers and companies.
This kind of relationship could be pursued because the products provided by Carrefour’s suppliers are not products of one-off transactions. A collaborative relationship would make sure that Carrefour continues to get value from the systems and processes it buys from technology vendors. Such relationships should be mutually beneficial to both parties because most of the company’s operations are automated (Carrefour Group 2018). Therefore, if there is no proper mutually beneficial relationship with third party service providers, the company’s operations could be severely affected.
As a supply chain coordinator, I would also complete order fulfillment processes by delegating the same responsibility to store managers. Stated differently, instead of centralizing the supply chain management at the headquarters, I would allow the store managers to have some control in the supply chain process by giving their input regarding order fulfillment initiatives. This strategy has been associated with an increased enthusiasm for store managers and departmental heads to participate in supply chain management. As highlighted by Xu, Xu, and Liu (2014), Carrefour’s Chinese operations have successfully utilized the strategy.
Information Technology Needed to Enhance Supplier Relationships
Information technology is an important tool in supply chain management. Its relevance in improving supplier relationships has been highlighted by researchers, such as Basu and Wright (2016). In the context of Carrefour’s operations, information technology tools could be used to enhance supplier relationships by attracting the support of senior managers (Donati 2018). In the same manner, it could be used to source funds or resources for meeting the terms of suppliers, thereby improving their relationship in the end.
The role of information technology in improving supplier relationships has been highlighted by researchers, such as Basu and Wright (2016), who have pointed out that supplier segmentation, supplier governance and the development of supplier relationships are among key areas of supply chain management that have benefitted from the adoption of information technology. For example, the process of identifying suppliers and segmenting them is often a difficult one if done manually.
However, when automated, the process is simplified. At the same time, information technology tools could be used to identify the right type of fit for suppliers, thereby improving the efficiency of the supply chain management process (Basu & Wright 2016). The role of information technology does not stop here because it spreads into the establishment of convenient communication channels that Carrefour could use to keep in touch with its suppliers and establish reliable payment procedures that are trusted by both parties.
The use of information technology tools in the management of supplier relationships is also supported by the fact that it could increase transparency in the contractual relationship that Carrefour would have with its suppliers (Basu & Wright 2016). This benefit is crucial to the development of a sound relationship between Carrefour and its suppliers because transparency helps to nurture trust, which is the foundation of positive supplier relationships (Donati 2018).
Although information technology could be used to improve supplier relationships at Carrefour, Basu and Wright (2016) posit that the biggest problem associated with its adoption is its underutilization in supporting internal and external organizational functions of a company. The benefits accrued from the use of technology in improving supplier relationships stem from the view that supplier relationships are often undervalued because most companies fail to understand how maintaining a good relationship with suppliers could be beneficial to both parties (Donati 2018). However, their views could change if a system for managing supplier relationships is developed.
System for Managing Supplier Relationships
As identified by Basu and Wright (2016), supplier relationships refer to the development of sound engagements with suppliers. Indeed, when there are good lines of communication between suppliers and managers, the entire supply chain process becomes smoother and more effective. As a supply chain coordinator of Carrefour Supermarket, I would develop a system for managing supplier relationships by integrating four key pillars: investing in a supplier management software, demonstrating to the suppliers that Carrefour is a good customer, reducing the number of vendors, and keeping the lines of communication open. Tolhurst (2013) highlights these four key aspects of supplier relationships as the main steps in effective supply chain management.
A software with relationship-building features could be instrumental in improving supplier relationships at Carrefour because the company’s operations are vast and include thousands of suppliers (Carrefour Group 2018).
Therefore, it may be difficult to keep track or maintain a good relationship with all these vendors. However, investing in a good supplier relationship software could help to develop a good relationship with suppliers by monitoring their performance and creating opportunities to accommodate new vendors (Tolhurst 2013). The software would also be instrumental in gathering suppliers’ information and manipulating it from one central location. Overall, the software could help to standardize supplier relationships and identify new areas of engagement that may require further attention (Tolhurst 2013).
As highlighted in earlier sections of this research paper, the second step I would pursue as a supply chain coordinator of Carrefour supermarket would be to demonstrate to the vendors that Carrefour is a good customer. This strategy stems from the recommendations of Tolhurst (2013), which encourage companies to maintain a positive working relationship with their vendors because suppliers also evaluate their performance in the same manner as companies review the performance of third-party players. One way I would demonstrate that Carrefour is a good customer is to make sure the vendors get their pay on time.
If it is impossible to do so, attempts should be made to notify them of the issue and to give them an estimate of when they should be expecting the payments. Lastly, the vendors should be provided with adequate lead-time to supply their products or services. All engagements will be done transparently.
Another step in the design of the supplier relationship system is to reduce the number of vendors to a minimum. This strategy also stems from the recommendations of Tolhurst (2013), which suggest that good supplier relationships are best achieved when the number of suppliers is low. Stated differently, it may be difficult to manage many vendors because of the overwhelming responsibility of maintaining a positive relationship with each one of them. Therefore, having a small number of vendors would improve the quality of the relationship between Carrefour and its vendors because it would make it easier to manage costs and eliminate unreliable suppliers. The criteria for eliminating vendors will be based on performance indicators.
Lastly, the process of developing positive supplier relationships will be premised on keeping communication lines open. For example, attempts could be made to include some vendors in company parties or meetings to make them feel welcomed and appreciated. Similarly, attempts could be made by Carrefour to visit the premises of some of the suppliers and be acquainted with their businesses. Basu and Wright (2016) agree that pursuing such a plan provides a “personal touch” to the relationship between suppliers and companies. At the same time, it creates the foundation for a solid partnership with the parties involved. Overall, this four-stage system for building an effective supplier relationship is intended to ensure optimal supplier performance. Broadly, figure 2 below explains the system’s design.
Order Fulfillment Activities and Inventory Control
Order fulfillment activities refer to processes Carrefour undertakes, from the point of ordering to end-user receipt of products or services (Lotfi et al. 2013). The smooth running of these activities requires proper inventory control. However, the process of fulfilling a company’s inventory needs is often a difficult one because each organization has its own customized needs (Lotfi et al. 2013). As the supply chain coordinator of Carrefour, I would embrace quality management and set par levels as the major activities of inventory control.
The goal of setting par levels would be premised on the need to make sure that inventory quantities do not fall below a specific predetermined level. Therefore, when the quantity of product falls below the set standards, new purchase orders will be placed. As a supply chain coordinator of Carrefour, I would also adopt the first-in-first-out system (FIFO), which ensures that the first products ordered are the ones to be sold (Basu & Wright 2016).
This system has a high efficacy level in retail chain management (particularly in the sale of perishables) because it ensures that the oldest stocks are sold out first and new ones preserved for a later sale date. This type of system ensures that orders are effectively fulfilled and the inventory tactfully controlled.
Summary
This report has covered the key tenets of supply chain management and their relation with the operations of Carrefour Supermarket. This case study gives insight into how companies, such as Carrefour, which have widespread operations, could use the competencies available in global supply chain management to improve their supply chain management functions. The importance of developing good supplier relationships has also been highlighted as an anchor to the realization of an effective and efficient supply chain management plan.
This research paper has also emphasized the role of technology in the development of such relationships and its efficacy in the development of efficient supply chain software and techniques, as witnessed in the development of Carrefour’s system for managing supplier relationships. Overall, to improve its supply chain functions, Carrefour needs to understand the effectiveness of its current supply chain management process because doing so would make sure the company’s products and services are provided in a timely manner. Setting par limits and FIFO are examples of techniques that could be adopted by the organization to improve its supply chain management plan.
Reference List
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