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Procurement and Supply Chain Management

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Executive Summary
The goal of the report was to critically analyze the supply chain operations of the Edeka brand
which is one of the biggest supermarket chains in Germany. It aims to examine the procurement
strategy for the brand in the context of COVID-19 and other complexities. The supply chain
operations of Edeka supported the long term vision and strategy of the brand effectively. The
brand had a sustainability target of becoming carbon neutral for such a purpose it is making
strategic collaborations with other brands. Importing was the new option in procurement that
would help the brand in creating a positive impact on the customers. The logistics and
warehousing costs will be reduced through new procurement options and will provide more
sustainable methods of doing business. At the end of the report, steps were suggested for making
import of the Kiwi fruit for sustainable sourcing.
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Table of Contents
Executive Summary.......................................................................................................................................2
Introduction....................................................................................................................................................4
Background of the Edeka supermarket..........................................................................................................5
Background................................................................................................................................................5
Supply chain operations and supplier management...................................................................................5
Impact of COVID-19 on the procurement and supply chain management process..................................5
Sustainability achievement and quality.....................................................................................................6
Fruit consumption..........................................................................................................................................6
Statistics and trends in fruit consumption..................................................................................................6
Exotic fruits consumption and Kiwi as a choice of fruit...........................................................................8
Current supplying countries and business opportunities...........................................................................9
Supply chain challenges focusing on sustainability.....................................................................................10
Alternative procurement options..................................................................................................................11
A. Import of Kiwifruit.............................................................................................................................11
B. Producing Kiwifruit from local farmers..............................................................................................12
Conclusion...................................................................................................................................................12
Recommendations........................................................................................................................................13
References....................................................................................................................................................14
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Introduction
The report critically discusses and analyzes the supply chain operations of the Edeka
supermarket group. In a critical manner, the dynamics, structure and main processes of
procurement of the brand will be evaluated. The report will follow the secondary research
methodology for collecting and analyzing the research data effectively. The supply chain
complexities in the context of COVID-19 will be critically examined. The sustainability
achievement and the quality of services will be critically evaluated and examined. The statistics
and trends in fruit consumption will be made with regard to exotic fruits in Germany. On the
other hand, the supply chain challenges will be analyzed and two main procurement options will
be examined. Hence in brief it can be said that the report critically analyzes the supply chain and
procurement operations of the Edeka brand.
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Background of the Edeka supermarket

Background
Edeka group is the biggest German supermarket company established in 1907 by Gert
Schambach and has its headquarters in Hamburg. The brand holds more than 20.3% of the
market share in the German retail sector and has proved to be a leading supermarket chain. The
brand operates in the retail sector in Germany which is worth EUR 525 billion and it is the third-
largest industry sector in Germany amounting to 16% of the total GDP. The brand has 11112
Edeka branches in over Germany (Sygic, 2022). By market capitalization, it is the largest
company group in the whole of Germany. There are approximately 4100 stores with Edeka
nameplates on them and it ranges from small corner stores to big hypermarkets.
Supply chain operations and supplier management
Edeka sells a wide variety of retail products such as vegetables, fresh fruits, baked goods, dairy
products, jars and tins. Each product falls under the supply chain operations of the brand where it
sources such products from various wholesalers and sells at the supermarket. Edeka has decided
to automate its distribution operations by making strategic collaboration with Cimcorp which is
the manufacturer and integrated turkey of robotics orders (Finance. yahoo, 2021). The brand has
a specialization in providing robotics solutions in the retail stores where it helps in managing the
operations of the retail stores with the help of robotics. The automation of the supply chain
operations will help the brand in enhancing its operational efficiency and increasing its supply
chain capabilities.
On the other hand, Edeka has made a partnership with Solace technology to stream master data
across its different stores and supply chain operations. The use of data in the supply chain
operations will enable the brand to make more accurate and effective business decisions. In the
planning phase of the supply chain, this technology will help the company to make a significant
impact on the changing needs of the customers (Gtai, 2021).

Impact of COVID-19 on the procurement and supply chain management process

During the times of the COVID pandemic, the retail sector was the only sector which was
working in full flow. The pandemic has made a negative impact on the operations of the brand
and has affected the operational efficiency of the brand. At the different levels, Edeka has used
technology to deal with the changing needs of the market in the COVID times. Vaccination
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during the pandemic was the biggest challenge under the pandemic for the brand and it has paid
a 5000 Euros bonus to its employees for promoting them for vaccination. At the time of the
pandemic, the government has implemented the 2g rule that bar people without two jabs from
entering Edeka premises. During the time of the pandemic, this rule has helped the company to
limit the spread of the virus (Republicworld, 2021).
On the other hand, the supply chain and procurement operations of the brand were affected badly
because of the international lockdown. The brand was unable to import imported food items such
as exotic fruits. This has made a negative impact on the supply chain operations of the brand.
Sustainability achievement and quality
Edeka supermarket has made an extensive focus on sustainability which has helped the company
to make a positive impact on the environment. By 2021 Edeka is supplying its control and
administrative operations with 100% green electricity from hydropower from TUV certified
system. Its different facilities such as Neumunster and Malchow are operating with 100% green
energy. With these efforts, the company is targeting of saving emissions of up to 12500 tons of
Co2. The respective three locations of the Edeka such as Neumunster, Zarrentin and Malchow
are responsible for 50% of the energy consumption (Esmmagazine, 2018). The brand is
committed to switching to renewable energy and making a positive impact on the environment.
The company to increase its reliance on green energy is looking forward to installing solar panels
on its premises that will help in generating green energy and making a critical focus on
sustainability (D'Eusanio, et.al.,2019).
Fruit consumption
Statistics and trends in fruit consumption
Fruits are an important part of the culture in Germany they fulfill the daily needs of the citizens.
The consumption of fruits among adults in Germany is constantly increasing where about
54.02% of women and 38.1% of men consume fruit daily. In the graph below it can be seen that
the fruit intake is increasing with age in both men and women.
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Source: (Rki, 2017)

It can be observed that in the age group of 65 women with higher education level consumes more
fruits often. It can be observed that fruit consumption is increasing with age and comparatively
women consume more fruits than a man (Ashby, et.al., 2012). The daily fruit consumption rate is
different between men and women based on the level of education and the physical needs of
human beings (Lbbw, 2020).
In Germany Apples and Bananas are the most popular and favorite fruit that is consumed in the
country. In the second place cherries, pears, strawberries and plums are the other important
fruits. The Germans are very fond of locally produced fruits and are mostly attracted to seasonal
fruits. The majority of fruits are available because of the high imports from the southern
hemisphere countries. The domestic consumption of the fruit average meets 40-15% of fruit
consumption in Germany. Germany has a strong culture of agriculture and it produces a wide
variety of fruits and vegetables. However the country is highly dependent on the consumption of
imported fruits and for such purposes, it is highly dependent on other countries (Freshplaza,
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2019). The fruits like Apple, Banana, table grapes, peaches, strawberries, berries, pears,
cherries, plums and Apricots are the fruits that are easily available in the local markets of
Germany (Hortidaily, 2021). Germany ranks 3 in the consumption of fruit and drinks after
Canada and USA. The country has become highly reliant on the consumption of imported fruit
items such as Kiwi and Avocado. There are a number of business opportunities in selling and
producing such imported fruit items.
Exotic fruits consumption and Kiwi as a choice of fruit
Germany is one of the biggest consumers of imported fruits in which pomegranates and physalis
are most in demand. On the other hand, other exotic fruits are getting popularity in the country.
In 2019 Germany imported 80.9 million pomegranates and other small exotic fruits. The country
has a huge demand for exotic fruits because of increasing demand in the citizens and increasing
trends toward a healthy lifestyle. Germany Turkey is the main exporter of exotic fruits for
Germany followed by the Netherlands and Spain. These countries are responsible for the supply
of exotic fruits in Germany and it supplies fruits such as Avocado and Kiwi. The high
consumption of pomegranates has resulted in heavy reliance on the import of exotic fruits (Cbi,
2020).
Kiwifruit is the most famous exotic fruit in the world and Germany is one of the main importers
of the Kiwi in the world. Germany imports about 96 k tones of Kiwi each year from countries
like New Zealand, China and the Netherlands. As per reports by 2025, the market volume of
Kiwis is about to increase by 5.9 million. As per the graph below it can be observed that
Germany is the main importer of exotic fruits.
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(Cbi, 2020).

Current supplying countries and business opportunities

New Zealand and Italy are the main exporters of the Kiwi fruits of 2018. Out of these New
Zealand is the biggest exporter of Kiwi with about 417k tones. New Zealand is famously known
for the manufacturing of Kiwifruit and because of this, it is known as a Kiwi country. The
countries like Italy, New Zealand, chili, Iran, Belgium, and Greece all together took 36% share
of the total export. Germany, on the other hand, followed a long way behind such leading
countries. in terms of value New Zealand remains with $ 1.2 billion remains the largest Kwifruit
supplier in the world where it is comprised 43% of global exports.

(Cbi, 2020)
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Currently, there is a wide range of business opportunities for the supermarkets like Edeka that
can import Kiwifruit and sell it to customers. The import of Kiwi creates a number of business
opportunities because there is a huge amount of demand for Kiwi Fruit in the country. at the
different levels, Edeka will be looking forward to the import of Kiwi fruit for its premium
customers. Because of specialized demand in the market, there are huge margins for Kiwi Fruit
and it can create new opportunities in the market (Globenewswire, 2020).

Supply chain challenges focusing on sustainability

A. The rising cost of fuel - the rise of global fuel prices around the globe is an increasing
concern for the brands like Edeka. The increasing cost of fuel prices is making the
transportation cost higher. Because of this companies have to increase the prices of the
service and products in the industry. The rising concern around fuel consumption has
triggered the controversy of environmental concern. The traditional methods of
transportation are dependent on the use of fuel and at the same time, the companies have
to move towards a more sustainable way of transpiration such as electric vehicles (Kache
& Seuring, 2017).
B. Supply chain volatility – in the times of COVID pandemic the supply chain of various
companies globally has shaken up. Because of uncertainty and unregulated demand for
products and services the supply chain mediums have become very volatile. This has
made a negative impact on the changing needs of the consumers and for such a purpose;
the companies like Edeka have to make changes in the supply chain aspects of the
business.
C. Global warming in the supply chain- Global warming has caused a negative impact on
the different methods of transportation. For example, the increasing sea level has resulted
in more risky seaports and now the companies are moving towards airfreight. It is
estimated that by the year 2100 the sea level will be increased by 2 to 6 feet will disrupt
the ports, railway lines, highways and other modes of transportation. The change in the
temperature level has resulted in the decreasing quality of food items and because of this,
the supply chain has to be faster and more reliable.
D. Ethical sourcing of the raw material - the illegal sourcing of raw materials and final
goods is causing a serious impact on the ethical sourcing of the products and services.
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This is making a negative impact on the supply chain operations of the brand. Edeka has
made a strict focus on the sourcing of the products and services through its exclusive
supplier agreements. The brand operates at an international level and it has a wide variety
of suppliers who ethically provides goods and services.
E. Energy consumption – the energy consumption the supply chain operations is a rising
concern for the brands and now the company are looking towards more sustainable
methods of the supply chain. The brands are increasing their reliance on green energy
which will help the company effectively manage its supply chain. The company to
increase its reliance on green energy is looking forward to installing solar panels on its
premises that will help in generating green energy and making a critical focus on
sustainability (Blumeglobal, 2022).
F. Risk management - the supply chain operations are exposed to various vulnerabilities
related to supplier relations, logistics, customer’s supports and client management. these
risks create undue pressure on the supply chain operations of Edeka. The brand has to
implement its risk mitigation strategies that provide a reasonable base for sustainable
development. on the other hand, it creates an additional Burdon on the sustainable
development of the supply chain management.

Alternative procurement options

Edeka can use the various procurement options to source Kiwifruit for the company. The
following procurement options will be available to the brand.
A. Import of Kiwifruit
The biological conditions of Germany are not favorable for the manufacturing of the Kiwi and
for such purpose Edeka must import the fruit from the countries like New Zealand and Italy.
This will be the most suitable option for the procurement of the Kiwi and delivering the same to
the customers are reasonable prices. Import can play an influential part in the supply chain
operations of Edeka and at the same time, the supply chain risks will be mitigated. However,
there will be other constraints also that can impact the quality of the Kiwifruit. Importing the
kiwifruit can result in an increased carbon footprint because of the use of transportation
mediums. This can create a negative impact on the sustainability of the supply chain
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management of Edeka. To reduce the carbon footprint the brand has to decrease its reliance on
the single sourcing of the Kiwi.
On the other hand, importing Kiwifruit will support sustainable sourcing because it will be
sourced from highly reliable countries such as New Zealand which is known for the organic
farming of kiwi. The countries such as New Zealand and Italy are favorable for the biological
development of the Kiwifruit and this will support the sustainable sourcing. On the other hand,
the cost of Kiwifruit will be increased because of warehousing and transportation cost. This cost
will be charged indirectly from the customers and in such a case the cost of the product will be
increased. However, the customers will be benefitted from the quality kiwifruit that is imported
from various countries.
B. Producing Kiwifruit from local farmers
Edeka can procure the kiwifruit from the local farmers that are producing the kiwifruit for the
local market. This mode of procurement will be less costly and create a positive impact on the
profitability of the customers. However, the quality of the fruit will be compromised because of
the imported quality kiwi that is sourced from New Zealand. The supply chain risks will be
limited in such a case because of the limited scope of procurement. The supply chain risks of
time and quality will be managed because the fruit can be sourced from the local farmer in less
time and delivered the same and fresh to the consumers in a time-effective manner. On the other
hand, the brand will be able to reduce its carbon footprint by using fewer transportation
mediums. Using less transportation from one location to another location within the international
boundaries can create a positive impact on carbon neutrality. Through this company will be able
to become carbon neutral in a time-effective manner. This procurement technique will support
sustainable sourcing by procuring the Kiwi from local farmers and at the same time, local talents
will be promoted. The warehousing and transportation costs will be reduced and ultimately
customers will be able to receive good kiwifruit at a reduced cost. This will help in maintaining
better customer relations and displaying a positive public image.
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Conclusion
The report has made a critical evaluation of the supply chain management and procurement
frameworks of Edeka supermarket. The supply chain complexities and challenges faced by
Edeka were examined and analyzed in the context of the COVID-19 pandemic and the changing
needs of customers. The statistics and trends in fruit consumption were analyzed with regard to
exotic fruits. The procurement of Kiwifruit and new business opportunities were discovered and
examined. The supply chain risks of Edeka were critically analyzed and potential solutions were
provided. The two main procurement options in the form of importing and local farming were
examined. Hence in brief the report has critically analyzed and examined the supply chain
operations of Edeka supermarket.

Recommendations
The following key next steps will be recommended for the importing of Kiwifruits
A. Identify suppliers – the brand needs to identify the international suppliers for import of
the Kiwifruit. Based on the quality and the pricing of the kiwi the suppliers will be
selected. A quote will be received from the importer and then the further document work
will be done.
B. Negotiate contract terms - once the supplier is selected and confirmed then contract terms
will be negotiated and finalized. Based on contract terms and condition the price, mode of
transportation, delivery and time will be decided (Midwestworld, 2019).
C. Finalize purchase order – once the terms and conditions are finalized then a purchase
order will be put. Within the agreed time the goods will be delivered.
D. Receive invoice – once the purchase order is finalized then an invoice will be received.
E. Delivery – at the end the products will be delivered to Edeka and payments will be made.
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References
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supermarket-chain-edeka-uses-140000832.html (Accessed: 21 May, 2022).
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(Accessed: 21 May, 2022).
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industries/consumer-markets-retail#:~:text=With%202018%20revenue%20of%20EUR,with
%2050%20million%20daily%20customers. (Accessed: 21 May, 2022).
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euros-in-bonus-to-fully-vaccinated-employees.html (Accessed: 21 May, 2022).
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management and sustainability literature. Supply Chain Management: An International Journal.
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second-most-popular-vegetable-in-germany/ (Accessed: 21 May, 2022).
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__blob=publicationFile#:~:text=According%20to%20GEDA%202014%2F2015,women%20and
%2061.1%25%20for%20men. (Accessed: 21 May, 2022).
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most-popular-types-of-fruit-in-germany/ (Accessed: 21 May, 2022).
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Cbi (2020) [Online]. Available at: https://www.cbi.eu/market-information/fresh-fruit-

vegetables/exotic-tropical-fruit/market-potential#:~:text=Germany%20is%20one%20of
%20the,fruit%20with%20HS%20code%2008109075. (Accessed: 21 May, 2022).
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Report-2020-Industry-Value-Volume-Trends-Production-Consumption-Imports-Exports-Prices-
and-Key-Market-Players-Through-2007-2025.html#:~:text=Spain%20(221K%20tonnes)%2C
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