Wal-Mart and Carrefour Supply Chain Comparison

Leon Liao, Garbour Chen, Alex Liu, Janet YouLeon Liao, Garbour Chen, Alex Liu, Janet You

PK

Supply Chain Strategy

Inventory Management

Logistics and Distribution

Procurement &supplier Management

Why this Strategy?

Technology

World WideWorld Wide

Walmart rated as No. 4 in the recent Supply Chain Top 25 by GartnerCarrefour has no such recognition yet

2,100,000

Employees2,100,000

Employees

Fleet of 3500

owned TrucksFleet of 3500

owned Trucks

80 Distribution Centers80 Distribution Centers

Most Technologically

advanced SCMMost Technologically

advanced SCM

Profit of $14 BillionProfit of $14 Billion

Sales of $405 Billion

(More than GDP of 160

countries)

Sales of $405 Billion

(More than GDP of 160

countries)

8500 Stores worldwide

in 14 nations8500 Stores worldwide

in 14 nations

495,000

Employees495,000

Employees

Profit of 3 Billion EuroProfit of 3 Billion Euro

Sales of 85 Billion EuroSales of 85 Billion Euro

12000 Stores

worldwide in 34 nations12000 Stores

worldwide in 34 nations

Founded in 1957 in France3PL Logistics3PL Logistics

66

Supply Chain StrategySupply Chain Strategy

WalmartWalmartStore formats:Store formats:

• Wal-mart Discount StoresWal-mart Discount Stores• Wal-mart SupercenterWal-mart Supercenter• Neighborhood Market by Neighborhood Market by

Wal-martWal-mart• Super-mer-cado de Wal-MartSuper-mer-cado de Wal-Mart• Market-sideMarket-side• Sam's ClubSam's Club

CarrefourCarrefourStore formats:Store formats:

HypermarketsHypermarkets Supermarkets Supermarkets Carrefour miniCarrefour mini Hard discount storesHard discount stores Convenience storesConvenience stores Cash & CarryCash & Carry

77

Supply Chain StrategySupply Chain Strategy

Wal-martWal-mart

Centralized, Centralized, standardized, uniform standardized, uniform supply chain.supply chain.

Every day low prices.Every day low prices.

CarrefourCarrefour

Decentralized, flexible Decentralized, flexible supply chain.supply chain.

Focus more on Focus more on customer’s needs.customer’s needs.

Inventory ManagementInventory ManagementCPFR (Collaborative Planning, Forecasting & Replenishment)CPFR (Collaborative Planning, Forecasting & Replenishment)

CPFR provides templates for supply chain partner collaboration. The process model at below is segmented into three stages. The planning stage establishes and updates the relationship; the sales forecasting and order replenishment stages occur more frequently.

An important premise of this model is that accuracies in the forecast can be improved by having the customer and supplier participate in the forecast.

Started in 1997-98 with pilot project with Sara Lee increasing sales by 32%

Massive improvement ( from 89% to 97%) of in-stock items

Lead times reduced from 21 days to 11 days

Implementation was costly and required huge analytics

Can be implemented with Large Suppliers

CRP --Continuous replenishment programDRP--Distribution Requirements Planning

Inventory ManagementInventory ManagementCPFR (Collaborative Planning, Forecasting & Replenishment) - WalmartCPFR (Collaborative Planning, Forecasting & Replenishment) - Walmart

1010

Consumption/Requirements

MRP, work out requirements to supplier (PO)

Production, delivery

SupplierSupplier

Carrefour EDI

Delivery

ERP

Inventory ManagementInventory ManagementERP - CarrefourERP - Carrefour

1111

Inventory Management (CPFR Vs. ERP)Inventory Management (CPFR Vs. ERP)

VMIVMI

VMI implementation decision by top mgmt.

VMI implementation decision by top mgmt.

Employees convinced of the benefits of VMIEmployees convinced of the benefits of VMI EDI Standards were

setEDI Standards were

set

POS data sent to manufacturers

POS data sent to manufacturers

Manufacturer decides inventory replenishment

Manufacturer decides inventory replenishment

Goods are shipped to Distribution center

Goods are shipped to Distribution center

Walmart/Carrefour sends

acknowledgement

Walmart/Carrefour sends

acknowledgement

Manufacturer gets credited

Manufacturer gets credited

Logistics and Distribution

Comparison:Wal-MartDistributionSystemUpdate

Year Supply Management Order Management and Performance

1969 Computer Tracking Inventory

1980 Barcode Track order flow

1985 Apply EDI in area distribution center

1986

1988 Fully apply EDI. 1st using of satellite system, scanner

1989 72 hours delivery

1990 IT vendor has access to website for sales info.

1992 24 hours deliverReal time information for better communication

1995 Reduce staff Quicker response in supply chain

1997 Real Time Sales and Inventory Data

1998 Auto supply chain for small/local vendor

1999 Effective customer feedback systemAvailability for customer shopping information to sales managers with vedio

2000 Increase 570% for website inquiry daily sales to $1100M on Thanksgiving Day

2001 Run updated websitecustomers can get commodity very easy from 500K skus.

2002 No1 of Top 500 in Fortune. Daily sales to $1430M on Thanksgiving Day

2003 Promote EDIINT AS2 to set up industry standard

Cross DockingCross DockingWalmartWalmartDone on 85% goods soldDone on 85% goods soldSavings of 2-3% on sales Savings of 2-3% on sales Continuous Continuous communication neededcommunication needed

CarrefourCarrefourMoving to Cross docking Moving to Cross docking since 2009since 2009

Logistics and Distribution

1515

Wal-Mart and Carrefour Comparison

1. Fast and responsive system

2. Company owned transport fleet of 3500 trucks

3. Replenish store shelves twice a week compared to industry average of every 2 weeks

Wal-Mart

1. Uses 3PL when venturing into countries outside Europe like Brazil and China.

2. Move to “River and Rail” transport to reduce truck mileage and safeguard the environment.

3. Average inventory is 37 days of COGS

4. Minimizing Pallet size for effective inventory management

Carrefour

Logistics and Distribution

1616

Wal-Mart and Carrefour Comparison

Wal-Mart Carrefour

Vendor1

Vendor2

Vendor3

Vendor…

DistributionCenter

Store 1

Store 2

Store 3

Store…

Vendor1

Vendor2

Vendor3

Vendor…

Store 1

Store 2

Store 3

Store…

Logistics and Distribution

1717

Wal-Mart and Carrefour Comparison

1. Higher pressure to distribution center: watch out the climate, stock and vendor delivery very closely to make sure high stock-in in stores.

2. Better lead time to vendors for better forecast and order volume.

3. Hard to forecast the demand precisely for different stores.

Wal-Mart

1. Shorter lead time to vendors.

2. Vendors need deal with so many different stores.

3. The stores compete with each other for same resources.

Carrefour

Logistics and Distribution

1818

Wal-Mart and Carrefour Comparison

1. Inspect factory with same standard very strictly to insure higher quality which is the key for success in long term.

2. Purchasing center to source all goods to insure the efficiency and cost control

3. Better negotiable power for bigger quantity

4. Lower price to customers

5. Outsource purchasing to Li&Feng for cost reduction

Wal-Mart

1. Buying agent independently to purchase for individual store.

2. Saving cost based on target price

3. Local resource. Less differentiation in products.

4. Return goods very convenient for direct contact with vendor, less overstock or stock out.

Carrefour

Procurement and Vendor Management

TechnologyTechnology

1919

WalmartWalmartLeader and pioneer in SCM technologyLeader and pioneer in SCM technologyWas the one who pioneered bar codes in 1984Was the one who pioneered bar codes in 1984Invested $4Billion in building a Retail Link private extranet system Invested $4Billion in building a Retail Link private extranet system which included the largest privately owned satellite system.which included the largest privately owned satellite system.Invested POS in 1983 and linked with goods replenishment process.Invested POS in 1983 and linked with goods replenishment process.Start to introduce RFID in 2003Start to introduce RFID in 2003Transferred from VAN EDI to web EDI in 2003Transferred from VAN EDI to web EDI in 2003Use IBM and SUN as technology partnerUse IBM and SUN as technology partner

CarrefourCarrefour

Technology followerTechnology followerGenerix is the main Supply Chain Software provider. Integration of Generix is the main Supply Chain Software provider. Integration of 3PL and logistics capabilities of Carrefour and suppliers 3PL and logistics capabilities of Carrefour and suppliers

Inventory Turnover ComparisonInventory Turnover Comparison

Wal-mart: 7.9 Carrefour 10.4 Industry: 7.5

Why this Strategy- WalmartWhy this Strategy- Walmart

1

To achieve the target that lowest total supply chain cost in the industry.

2 3

U.S market needs are huge and almost identity.

3

U.S enterprise pursue new technology and willing to take risk.

Focus much on U.S market as it account for 70% of the total sales turnover.

Why this Strategy-CarrefourWhy this Strategy-Carrefour

1

To build flexible and customer focused supply chain to compete in the global market.

2

Carrefour operates in three major markets: Europe, Latin America and Asia. With a presence in 34 countries, over 57% of group turnover derives from outside France.

3

Carrefour’s main market varies a lot as it comes from different country, culture, and purchasing power.

3

Europe enterprise are usually conservative and respect tradition.

Team WorkTeam Work

Alex Liu: Strategy Alex Liu: Strategy Janet You: Logistics and ProcurementJanet You: Logistics and Procurement Garbour Chen: InventoryGarbour Chen: Inventory Leon Liao: Technology and summaryLeon Liao: Technology and summary

Q&AQ&A

2424