METRO Cash & Carry Indian Success Stories

Harsh Bahadur Managing Director

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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

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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

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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.

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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

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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.

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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%.

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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.

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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 METROs customers like HoReCa & B&C class Retailers, we saw an opportunity to promote a budgetpriced juice brand. METRO worked with him to upgrade his Quality and Packaging (Tetrapak). Result Good quality juices being sold at affordable prices
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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.

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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.

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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

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5 Success Story #3

Success Story # 3 A Renowned 5 Star Hotel

METROs 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.

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5 Success Story #3

Success Story # 3 A Renowned 5 Star Hotel

Current status The hotel approved METROs pork products for its Bangalore outfit. After satisfying itself, discontinued Australian imports and switched to METROs pork for all India requirements.

Based on ongoing dialogue and study,

customer has made changes to the logistics.

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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.

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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.

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Organised Supply Chain Player

Organised Supply Chain Player Possible Further Impacts

Major improvements in agricultural supply chain possible Metros

international experience

Reduction in wastage : Better realisation for farmers : Lower consumer Prices De-layering of chain will reduce costs Margins Transaction Costs Transportation

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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

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