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Table of Contents
Introduction....................................................................................................................................2
PART 1...........................................................................................................................................3
Components of an effective Business Operations for Cargills Food City.............................3
Issues if the hybrid method id used for shopping - Cargills Food City................................7
PART 2.........................................................................................................................................11
Root Definition.........................................................................................................................11
CATWOE.................................................................................................................................11
Current Scenario.....................................................................................................................12
AS IS DIAGRAM....................................................................................................................12
PART 3.........................................................................................................................................14
How to convert Performance objectives into operations priorities?...................................14
Balance Score card..................................................................................................................16
Conclusion....................................................................................................................................18
References......................................................................................................................................19
Introduction

Cargills (Ceylon) PLC is a well-known corporate in Sri Lanka with more than 36 years of
existence in industry mainly engaged in the production and trade of food and drink and
distribution. The company's segments include diversified retail, fast moving consumer goods
(FMCG) and other catering services.

Cargills Food city was established to cater supermarkets and modern trade operations where
company wanted to have a company owned market place to trade Cargills own brands while
facilitating the customer base to experience in supermarket shopping with variety of food and
home Fast Moving Consumer Goods (FMCG) items in one store. Cargills have established its
food value chain wide across the country and Food City Express to facilitate key revenue
generating customer segments to experience convenience shopping with more luxurious products
and convenient shopping lists to influence the purchasing behavior in to more convenient
shopping experience. [ CITATION Car192 \l 1033 ]
PART 1

Components of an effective Business Operations for Cargills Food City

Cargills Food City and Food city Express operations are mainly focused on value creation
through the process. Superior customer service is targeted through fast service delivery and
maintaining the quality of the service and products. Hence the Porter’s value chain model will be
the key process [ CITATION Jam141 \l 1033 ] can be used to reengineer the components of an
effective business operations with regard to Cargills Food city supermarket operations.

Primary activities- Inbound Logistics

In value chain analysis all the inputs for the manufacturing or trading will be considered as
inbound logistics. Below are the mainly impacting inbound logistics factors for Cargills Food
City.[ CITATION Car192 \l 1033 ]

i. Sourcing

Cargills Food City super market chain will be having main value drivers through best in
class sourcing network and the extended network up to the main source of the supply.
Cargills Food City will have a better traceability as they own the sourcing network and
most of the sourcing happens via its own farming communities. Cargill have own supply
sources developed and all the vegetable, fruits and agricultural raw food items are
sourced through its own farmers’ network. Strategic supplier sources are the key success
factor to manage the quality of the goods and in order to manage the overall sourcing
cost, company have gained the best prices through development of owned farming
network. This is a competitive advantage Cargill experience compared to other
supermarkets and competitors brand such as Keells, Arpico, Laugfs, SPAR and Glomark
supermarkets. Company has the power to negotiate the best prices due to volume
commitment and a solid supplier network developed for own farming needs of Cargills
Food City. [ CITATION Har171 \l 1033 ]
 ii. Supplier communication and information flow

Supplier communication play a vital role in Fast moving consumer Goods (FMCG)
trading business as most of the market demand fluctuations and supply restrictions to be
communicated on time and this information should be updated in real time to manage the
dynamic business trading activities to gain the best value. Cargills Food City chain is
widely dispersed. Hence any purchasing decision or price changes of supplier should be
communicated to each and every stakeholders of the chain and all the branches should be
aware of the changes as and when the changes are incorporated in to the systems. These
inbound information process will have a significant value as any loss of a critical
information may lead to food waste and money and time will get wasted. Compared to
other key players in the market Cargills supplier communication channels are not that
strong enough to capture the real time information. Hence there is a room for errors and
waste if the timely actions on supplier information sharing not takes place. [ CITATION
Ben17 \l 1033 ]

iii. Inbound delivery of food items

Delivery efficiency is a key element of the inbound value chain. For Cargill Food City
key challenge is to maintain the freshness of the goods delivered to the outlets and most
of the private transportation services are enabled to manage the shortest routes and
maximum distance for transportation of foods items to maintain the freshness.
[ CITATION Int18 \l 1033 ] However, still keeping the freshness up to the expectation is
a challenging task compared to competitor freshness. Keells Supermarkets have
maintained a better inbound delivery efficiency as most of the freshness parameters are
met at the delivery. [ CITATION Dav181 \l 1033 ]
Primary activities- Operations

i. Shelf arrangement and maintain the availability

For supermarket operations it’s quite important to maintain the optimal shelf arrangement
and locating the right product in the right place to maintain the visibility at its best.
Cargill Food City and Food Express are mostly focusing on improving the customer
reach by increasing the number of outlets and branches. However, the space in the Food
City may not facilitate the optimal shelf arrangement due to the space limitations. Hence
the best value compared to Keells Super shelf arrangement may not be achieved even
though the product availability is maintained at the same level compared to direct
competitors.

ii. On the shelf freshness and managing the inventories

On the shelf freshness is a key competitive advantage any supermarket trying to excel at.
In order to maintain the on the shelf freshness, the overall inventory management and
delivery management should be considered. Currently Cargills Food City maintaining the
on the shelf freshness by maintaining a fast tracked inventory moments and
replenishments to replace the goods with fresh stocks once the freshness getting depleted.
Customer preference and loyalty will be main focus through maintaining a high freshness
at the stores. However due to inbound delivery inefficiencies it may be challenging to
maintain the on the shelf freshness on consistent basis.

iii. Operational lead time for customer order processing

Lead times to fulfill a customer order is a key value driver and extended time spent on
ques may disappoint the customers as time spent on shopping will be wasted if the order
 completion time is too much. Cargills Food Cities are quite efficient on system capturing
and billing operations however compared to Keells Supermarkets most of the order
processing on larger quantities may not as efficient as Keells due to availability of ques
and order processing units not many for a branch to manage the traffic on order
processing.

Primary activities- Outbound logistics

i. Customer order delivery packaging

Cargills Food City currently using most of the polythene shopping bags as the packaging
and with the environmental concerns company transformed the packaging in to
degradable delivery packaging and encouraged the customers to use their own woven or
fabric bags to transport the purchased goods.

Primary activities- Marketing and sales

i. Customer promotions on product bundling

Cargills Food City regularly carry out in-house on the spot customer promotions which
are generating additional sales for the promotional items. Also Product bundling are
targeted to move less moving product with the high moving products through bundling.
Hence the shelf space and food item movements are taken place at high frequency as
discounts are offered on bundling promotions. In order to increase the volume business
all the super markets are partnered with the corporates to carry out bundling promotions.

ii. Own brand promotions

Cargills own branded products such as Ice cream and dairy products, Sugar and essential
items which are marketed through own brand make additional margins compared to other
corporate partner trading items. These are mainly marketed through heavy promotions as
higher revenues can be generated. However, compared to Keells Super market own
branded product range Cargills may not have that competitive advantage on making
 significant share of income through own branded product promotions due to lesser
product range of Cargills branded through own network.

Primary activities- Services

i. Customer loyalty benefits

This is a key approach and after sales service Cargills Food City is following and most of
the customer loyalty benefits are passed through this service. Cargills customer base will
not be limited to urban cities and even for the rural community the benefits are passed.
Hence the loyalty program is stronger than other competitor loyalty schemes.

Issues if the hybrid method id used for shopping - Cargills Food City

Cargills Food City shopping experience can be developed as a hybrid shopping platform where
tradition brick and mortar shopping by going in to a Cargills branch and do shopping combined
with online shopping with delivery facility to customer’s door step will have some challenges
with the current practices of Cargills Food city.

These issues/challenges can be explained by evaluating the customer value hierarchy

[CITATION Kot121 \l 1033 ]. Below are the levels of customer value hierarchy for evaluating
the challenges in terms of customer value perspective.

Core product/service

i. Maintaining Food quality as per the standard online selection

Basic customer requirement will be to gain the shopping experience. When introducing
the online platform, Cargill Food City will face a challenge on providing the physical
 shopping experience as customers are used to experience physical shopping and food
item selection by themselves as per their preference. When making an online platform
together with the tradition store shopping Cargills will have a challenge in standardizing
the food as the customer expecting the same quality if they select online compared to
store shopping. Since there will be no physical feeling on shopping on food item
selection the service levels and food quality will be challenged if the standardization is
not seen.

Generic Product/service

i. There will be no human interactions to convince the customers

This will be experience by Cargills as there will be lesser human interaction on
convincing the product quality and novelty. By providing a generic online shopping
platform will make the customers more focused only on generic product ordering as the
human interactions may need to evaluate the purchasing decision on customized
products.

Expected product/service

i. Expected product conditions such as additional packing and order sizes/ freshness
delivery charge may not delivered
Cargill will have the challenge of matching customer expected additional customized
requirements such as additional packing requests for meat items and for perishable items
and sometimes the delivery charges may not be justifiable for small order quantities as
they expect to order on daily basis or weekly basis. Freshness on the product can be
challenging as the customers always expecting the visible quality and freshness to be
maintained for the online ordered products as well. It can be changed due to different
delivery lead times and methods are used to deliver to customer’s hand.

Augmented product/service
 i. New product promotions cannot be experienced on the spot basis
This will be experience by Cargills as online stores may just populate the promotions and
no experiential purchase can be promoted for on the spot promotions. Even with sending
the free samples for online orders customers may reluctant to order it as the purchase
decision will not be influenced as on the spot marketing for new varieties and product
differentiations.

Potential product/service

i. Own brand potential promotions may be challenged due to not aware of the new Cargill
products
This will be experienced by Cargills when the product promotions on own branded high
margin nonmoving products are targeted in house due to the cost of digital media
advertising and without human interactions these messages will not be passed to
customers on bundle products and no experience in buying theses product may be a
barrier for online shopping.

Further Four V's profile model [ CITATION Cha10 \l 1033 ] can be used to illustrate the issues
on maintaining a hybrid system.,

Volume

i. High amount of transactions to be managed

Since Cargill is focusing on dual platforms on service delivery maintaining a larger
amount of transactions may create additional burden on data management and transaction
tracking and load balancing.

Variety
 i. Service differentiation can be challenged as differentiating online services will not be
easy as differentiating physical shopping experience
Cargills services will have to maintain the same service levels as physical stores and
online platforms and any change in service levels in these two platforms will make
customers dissatisfied.

Variation in demand

i. Order demand capturing will be difficult due to more sources to be managed

Online sources and physical shopping both will create different demand dynamics and
these can be generated inaccurate demand projections due to online sales can be varied
based on other factors such as delivery charges and quantity ordered if bulk orders are not
interested.

Visibility

i. Online services issues may create visibility and transparency issues

Visibility issues on online platforms may arise due to system traffic and network speed
even the payments can be subject to frauds if the security measures are not incorporated
properly.

However, with the introduction of hybrid model will make Cargill more competitive due to
better customer reach. On the other hand, cashless transaction will be promoted and more
sustainability will be incorporated to the system due to carbon emission reduction by cutting
down travelling and attracting customers for outlets.

Cost can be increased initially due to high promotions to popularize the service and with the time
cost will be optimized and online platform can be popularized with its convenience feature on
shopping.
Hence it’s recommended to go for the hybrid model in order to maintain the market
competitiveness.

PART 2

Root Definition

Implementation of the online ordering and delivery platform together with the existing
shopping platform will challenge the competitiveness and revenue growth of Cargill Food City
PLC as there can be cost improvement, freshness challenges, online service issues and service
level deteriorations.

CATWOE

Customers Cargills existing and future potential customers

Actors Online service providers, Government, Suppliers
Transformation New ordering platform will be incorporated with the existing physical
shopping with more advanced technological e commerce platform.
Existing operational issues will be addressed to make the transformation as
a hybrid solution to maintain online and physical shopping platforms
World view Internal payment security

Owner Cargills Food City

Environment Local supermarket customer market

Current Scenario

AS IS DIAGRAM
TO BE SYSTEM MODEL
PART 3

How to convert Performance objectives into operations priorities?

Performance objectives of managing the best cost, competitiveness, market reach and
sustainability will be managed with key operations priorities. Below are the methods which can
be used to convert the performance objectives in to operations priorities,

Identify the key bottlenecks of the current system

As per the AS IS analysis and TO BE analysis key bottlenecks such as cost, Quality changes,
Service levels and resources to manage online and outlet operations can be identified with
detailed understanding. These will be the key manageable performance conditions as any
deviation of these will have an adverse effect on the final objective of maintain Cargills
competitiveness in the industry and to create more sales through the new sources.

GAP analysis

GAP of the current resource and other bottleneck factor availability should be compared with the
expected levels of competitiveness growth in terms of market reach and revenue growth at top
level of management decisions. Identification of the existing gaps should be the starting point to
generate sustainable action plan and strategy to attack the key issues.

Benchmark with the industry best practices

Once the gaps are identified industry best practice should be compared to arrive at the possible
actions to take forward. Similar case studies on implementing a hybrid shopping platforms and
its impact on the competitiveness and revenue growth should be compared and used for best case
scenario for achieving the targets.
Create SMART objectives for each operations

Based on the identified industry practices and gaps and expected level of achievement for top
level competitiveness and revenue growth Cargills management should formulate the bottom
level performance objectives for each department to achieve the expected targets. However, the
objectives should be SMART (Specific, Measurable, Achievable, realistic and Time bound) for
each of the operations covering the entire Cargills Food City value chan.

Inbound logistics should address key impact on competitiveness due to lead time changes and
freshness and service quality on generating new sales through hybrid systems and customer
penetration by improving the capacity for reaching out the customers to do more transactions and
continue the service on consistent basis.

Analyze and establish the key monitoring measures

Once the key objectives are set for each and every department and operational activity key
variations should be analyzed to check whether the set objective measures are realistic and
whenever there is a major change takes place corrective actions on follow up should be carried
out to maintain the focus on achievement of the final objective.

Measure the achievements and feedback

Achievement should be recorded and evaluated against the final targets on timely basis. Since
this is a change process it’s required to gather feedback from each and every department and
individual on achievement against the set target. Any barriers and performance issues to be
identified and addressed for future periods. It should be focus on any improvements based on
the current achievement gaps and new avenues for improvements should be evaluated through
constructive criticisms.
Balance Score card

Balance scorecard performance Measures

perspective
Financial 1. Revenue Growth %
2. ROI%
3. Volume growth%
Customer 1. Service level satisfaction
improvement %
2. Customer ratings on ontime
delivery %
3. Number of customer complaints
addressed

Internal 1. Freshness improvement%

2. On the shelf availability %
3. Online sales penetration%

Learning and growth 1. New trainings undergone%

2. Number of new initiatives to
improve system
3. New learning sharing %

Figure 1 : balance Score card measures for Cargill Food City hybrid system

As per the above balance score card measures Cargills should be able to evaluate the best value
additions and achievement not only from financial perspective but also from other customer,
Internal operations and learning and growth perspectives.
Financial Perspective

Key financial performance measures KPIs are Revenue Growth %, ROI%, Volume growth%
which are defined in order to measure the key impacts on overall sales and revenue aspects.
Since this is an investment ROI % is important to evaluate the return on hybrid order plat form.
Based on that the project viability can be further evaluated as a post implementation measure.

Customer

Customer satisfaction, and complaint handing are key areas to be addressed in order to maintain
the customer loyalty. These should be evaluated timely basis and service level variances should
be further analyzed to identify the root causes. With the implementation of hybrid system there
can be many complaints and service level challenges. Hence addressing these will be important
to maintain the competitiveness.

Internal

Freshness, on the shelf availability and Online sales penetration are key areas to be evaluated in
order to manage the competitiveness. Operations will be the key cost saving options to be
considered when new system is launched and efficiencies should be achieved through system
harmonization.

Learning and Growth

New training and innovative ideas and new learning sharing aspects will improve the learning
culture and improve the internal competitiveness and skills of the internal employees.

Conclusion
Cargills Food City management should focus on the system changes and key impacts on the
competitiveness and revenue growth which are considered to be the key objectives at top level.
Further evaluating the key performance KPIs will ensure more systematic approach to manage
the change and any improvement can be monitored through the balance score card measures.
References
Ben,L, 2017. Pareto analysis in practice Nestle` case study, s.l.: world economics.
Cargills Ceylon PLC, 2019. Annual Report 2019, s.l.: Annual Report 2019.
Chambers ,K; Johnston,P, 2010. Four Vs model, s.l.: Journal of modern technology.
David, K, 2018. Operations management Nestle` inventory control practices, s.l.: Research gate.
Harry, K; Jack, L, 2017. Material handling nest practices in Nestle`, s.l.: Asian Economic
sreview.
International Standards Organization, 2018. Nestle` Quality in ISO , s.l.: ISO annual review
2018.
James. K, 2014. Porter's value chain analysis, s.l.: World Economics.
Kotler,P, 2012. Customer Value Hierarchy, s.l.: Elsivier.