MANAGING SUPPLY CHAIN OF CARREFOURS To embrace the challenge of building a worldwide company, not only geographically international, but

truly global in vision, leveraging each country's experience as we optimize our resources and technology."1 - Carrefour's Global Vision, Annual Report 1997. "Carrefour is the world's most successful international retailer. Wal-Mart has no track record outside North America."2 - Jaime Vasquez, an industry analyst at Salomon Smith Barney (SSB) in London.

INTRODUCTION

In the late 1990s, France based Carrefour Group (Carrefour), the second largest retailer in the world (Refer Exhibit I for the company's financial performance) embarked upon a $170 million project to standardize its business systems and processes across the world. Among other activities, the project involved the institution of shared service centers (SSCs) in each country in which the company operated, so that various activities such as purchasing and management of suppliers could be conducted at a single location. Analysts said that by establishment of SSCs,Carrefour would be able to significantly improve the efficiency of its supply chain. Carrefour used advanced technology to manage its various supply chain processes including procurement, logistics and warehouse management. The company used cross docking and radio frequency equipment to transport the goods quickly from warehouses to the retail stores. Carrefour also embarked upon an exercise to centralize its procurement and distribution activities in the late 1990s. This exercise covered all its global operations so as to reduce costs and enhance distribution efficiency. The company relied on third-party logistics providers (3PLs) to manage its supply chain in most of its global operations. It had global and regional tie ups with reputed firms for this purpose. Analysts felt that by managing its global supply chain operations well, Carrefour had emerged as one of the leading retailers in the world.

BACKGROUND NOTE
The first Carrefour (means crossroads) retail store was established in 1959 at the convergence of five roads in Annecy, near Paris in France, by Marcel Fournier and Louis Defforey. In 1963, Carrefour opened its first hypermarket in Sainte-Genevieve-des-bois in France. The hypermarket had a floor area of 2,500 square meters, 12 exit points and 400 parking points. Carrefour started its first global venture in 1969, by opening a hypermarket in Belgium under the brand name 'Champion.'

In 1970, Carrefour's share was listed on the Paris stock exchange, Paris Bourse. In 1972, the company opened its first stores in the UK and Italy. In 1973, Carrefour opened its first hypermarket in Spain under the 'Pycra' brand while the first hypermarket in Brazil started functioning in 1975. In 1989, Carrefour opened its first hypermarket in Asia, in Taiwan. By the late 1980s, Carrefour had a significant presence in a major part of Europe and had established its stores in North America, South America and Asia. In 1990, Carrefour diversified into the oil business by establishing 'Express Oil .' In 1991, Carrefour acquired two French hypermarket chains - Euromarche and Montlaur. It acquired 'Felix Potin' (convenience store) in 1996 and 'Catteau' (supermarket chain) in 1997. The company had established a strong presence in international markets by the late 1990s (Refer Exhibit II). To strengthen its presence in the domestic market, the company acquired the French retail group Promodes in 1999. This made Carrefour Europe's #1 retail company and second in the world behind Wal-Mart in terms of global revenues.
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MANAGING THE SUPPLY CHAIN PROCUREMENT

Carrefour usually followed a 'direct procurement strategy' acquiring food products and other goods directly from the manufacturers. The company purchased goods from local manufacturers in all the global markets in which it operated. Approximately 90% of the goods at Carrefour stores in developing markets were procured locally. Explaining the rationale, Daniel Bernard (Bernard), Chairman and CEO of Carrefour said, "Retail is the image of the country in which it lives. You have to adapt your food and other products to the local culture." Local purchases enabled the company to keep its costs low as well as shorten its supply chain. However, in a few countries, for instance, in Japan, Carrefour depended on wholesalers for almost 40% of the items supplied to it. Carrefour used the Electronic Data Interchange (EDI) for procurement, which required electronic linking of stores, warehouses and suppliers through computer networks. The company initially used EDI to receive orders from the stores and receive dispatch notices...

NEW INITIATIVES Through the application of modern technologies, Carrefour was able to significantly improve its supply chain operations over the years. In late 2003, in its efforts to integrate its global supply chain operations, Carrefour tied up with See Beyond to install Integrated Composite Application Network (ICAN) software. This was a part of Carrefour's strategy to adapt itself to the local conditions by customizing its operations, the merchandize mix and even store formats. By implementing ICAN, Carrefour aimed at integrating its stores, distribution centers and supply chain partners in various countries...

By, VIkas and Rahul