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INTRODUCTION TO METRO METRO Cash & Carry – this name stands for one of the great s uccess stories in modern commerce. The unique wholesale business-to-business mod el of METRO Cash & Carry is focused only towards professional customers such as hotels, restaurant, and caterers as well as small and mid-sized retailers. METRO Cash & Carry offers this target group a greater efficiency than the multilayere d supply chain thus helping them to improve their business: By offering them a o ne-stop solution for their purchases, by helping them to improve their assortmen t, by offering them high quality products at reasonable and transparent prices a nd by offering them a consistent supply source. What does METRO offer? METRO Cas h & Carry is a reliable partner for more than 20 million professional customers worldwide. It gives them a clear competitive advantage in their own markets. Pro fessionals can purchase everything they need to run their business: A restaurant owner, for example, can buy food like fish or vegetables as well as kitchen equ ipment and officeproducts supplies. METRO Cash & Carry offers exceptionally wide rang e of highquality under one roof. Depending onan the size and type of whol esale center, the assortment includes up to 20,000 items in the food range and 3 0,000 items in the nonfood sector. As the name implies, METRO Cash & Carry custo mers select their own items and take them with them to their restaurants and sho ps. With this unique businessto-business concept, the company has grown to becom e a leading international player in self-service wholesale.

 

Company History METRO Cash & Carry is a leading international company in selfser vice wholesale and operates more than 600 outlets in 29 countries. With over 100 ,000 employees worldwide, the company achieved sales of € 31.7 billion in 2007. By generating almost 50 percent of the total sales, METRO Cash & Carry is the topselling sales brand of the METRO Group. Assortment and service of METRO Cash & C arry’s unique business-to-business model are targeted only towards professional cu stomers such as hotels and restaurants as well as small and mid-sized retailers or institutions. The company offers these special groups a high level of assortm ent competency both in food and nonfood as well as attractive wholesale prices. An efficient and internationally conferrable concept ensures success in entering new markets. METRO Cash & Carry – A story of expansion The self-service wholesale trade came to Europe in the year 1964 when METRO SBGroßmärkte GmbH & Co. KG was fou nded in Mülheim/Ruhr. The initiator and driving force behind this concept was Prof .the Dr.new Otto Beisheim. In 1967 the Beisheim, Franz Haniel Cie. company a partner in venture. Prof. Dr. Otto the &Franz Haniel &became Cie. GmbH company and the Schmidt-Ruthenbeck family then each held one third of the shares in the German METRO activities and thus constituted the “original group of partners”. As fr om the year 1968 the concept was extended beyond the German borders, with the Du tch company Steenkolen Handelsvereeniging N.V. (SHV) as a new partner. The two s ides jointly established Makro Zelfbedienigsgroothandel C.V. with the original g roup of partners holding 40 percent of the shares in this activity. Within the f ramework of a first major expansion drive METRO/MAKRO Cash & Carry entered the m arket in nine Western European countries by 1972. In the nineties, METRO Cash & Carry expanded its activities to Portugal, Turkey, Morocco and to Eastern Europe .

 

In July 1996 METRO Cash & Carry merged with Kaufhof Holding AG and Asko Deutsche Kaufhaus AG and the METRO Group was founded. That year also saw the group’s going public. The Metro stock is the only retail stock listed in the German blue-chip index “DAX 30“. The first step into Asia was taken when METRO Cash & Carry moved in to China in 1996. Today the company is present in 5 Asian countries: China, Indi a, Japan, Pakistan and Vietnam. The METRO Cash & Carry business is going to be f urther internationalized and expanded with the focus on Eastern Europe and Asia. Already by today, more than 80 percent of the staff is working outside of Germa ny. In many countries the company is on of the major employers. METRO in Pakista n METRO Cash & Carry announced its operations in Pakistan in January 2006. Since then, it has established itself as a potential market leader in wholesale. Unde r the supervision of Managing Director Mr. Giovanni Soranzo, METRO Cash & Carry Pakistan has opened its first store in the city of Lahore in October 2007. The c ompany’s country head office is also in Lahore and currently employs overech 40 0 people in two offices. . METRO Cashbased & Carry’s commitment to Pakistan is also oed in its donations to the President’s Earthquake Relief Fund.– The company donated €100 000 in January 2006 towards President s Earthquake Relief Fund. It also has plans to fund development activities in the country in association with the Germ an Investment and Development Company. Such activities have

 

successfully been carried out in other countries. A recent example in Vietnam an d a similar program for fishermen and sheep farmers in India where more than 900 fishing crew and 18,500 sheep farmers were trained about the best practices. ME TRO Cash & Carry plans to invest in Pakistan on a sustained and reliable basis i n the years to come. The company’s unique business model offers potential for a de crease in market prices and promotion of local goods and personnel. 10 METRO Cas h & Carry principles The success of the company is based on the following princi ples: • Focus on professional customers • One-stop shopping • Efficient store concept designed for professional needs • Advanced customer service • Enhanced customers’ comp etitiveness • Excellence in supply chain and quality management • Strengthening of l ocal suppliers • Development of national infrastructures • Career opportunities • Inte rnationally transferable concept

 

SERVICE & QUALITY The goal of METRO is to efficiently handle thousands of orders , shipments and deliveries and ensure that goods arrive at the right place at th e right time. Supply Chain Management plays an important role in our highperform ance logistics system and enhances our capacity to supply food and non-food prod ucts on a daily basis with consistent high quality, diversity and freshness. The distribution of products that are temperature-sensitive is a huge challenge. Qu ality and freshness can only be assured if the goods are constantly kept under a temperature controlled environment, right from the time they leave the producer till they reach the customer. At METRO Cash & Carry Pakistan, the warehousing a nd transport for frozen and chilled products is ensured at a constant temperatur e (in minus or plus degrees), according to product requirement. Temperature moni toring is done manually and by computerized mechanisms, both during transportati on truck and in cold storage. A) Fruits & Vegetables: For the first time in Paki stan, METRO Cash & Carry offersprocessing. a platform for & Vegetables equipped with modern accessories for product This Fruit ensures hygienic, temperature-co ntrolled, clean and

 

packed fruit and vegetables as per international standards of Hazard Analysis of Critical Control Points (HACCP). B) Live Fish: METRO Cash & Carry Pakistan offe rs live fish at Metro centers. Now you can choose live fish of your choice and e njoy the taste of freshness. Food 1. Fresh The Fresh department comprises fresh meat, fish, fruit and vegetables and dairy section. Special care is taken in han dling, storage and maintaining freshness of products throughout their shelf life . Freshness of food products is checked on a daily basis to make sure that no pr oduct is left on the shelf that does not fulfill standard requirements of qualit y and freshness. 2.DryFood The Dry Food department comprises edible grocery, can ned goods, beverages, sweets, confectionery, as well as detergents and toiletrie s. Special attention is given to the storage of high quality grocery items such as rice, pulses, lentils, spices, etc., to maintain their colour, texture, and a roma. A separate area has been designated for spices and nuts for the ease and c omfort of customers. They have their Halal 3.Hygie ne&Sanitation Metro is extra cautious aboutcertificate the hygienefor andverification. sanitation condition s to be ensured by theirr suppliers especially for fresh food items.

 

Not only that we ask our suppliers to follow the quality standards, we also appl y strict hygiene and sanitation requirements in the day-to-day operations of our stores. We only buy products that are hygienically prepared and properly handle d at source by suppliers. We ensure that sanitation measures are a key part of t heir production and processing procedures. “Internal Environmental Analysis of Met ro” LAYOUT PLANNING “Layout planning is determining the arrangement of resources wit hin a facility.” best physical  This definition of layout planning is clearly visib le in Metro Store.  As they have proper segmented each and every department and p eople can freely move between from one place to another and products can easily be located from a far distance.  All products are placed in a systematic manner a s there is no wastage of resources.  Landscaping was done professionally LAYOUT O F DEPARTMENTS Metro has designed their departments in such a way that all the pr oducts of the same kind like fresh food, non-food & dry-food etc. are grouped to gether. the convenience of the customers currently they have 16 departments and theyFor are: • Fruits & Vegetables

 

• • • • • • • • • • • • • • • Spices & Pickles Fish Dairy Meat Grill Bakery Tobacco Beverages Office, Media Home Electronics Toiletries, Detergents Edible Grocery Household/ Clothing Sports & Seasonal High volumes of food items generate greater profit an d to balance them Detergents are considered a part of Food Department. This kind of a department layout shows that customers can move between food & non food it ems easily. LAYOUT PLANNING IN METRO The pattern of layout Metro is the same for all Metro Stores over the world. They are following the “Merchandizing Principle” i .e, it is in the form of blocks and is vertical. We have observed two types of l ayouts in Metro which are the: • Process Layout • Fixed-Position Layout

 

PROCESS LAYOUT In this kind of layout, one has to group similar resources togeth er • Any new brand introduced in the market is placed in front of the existing Bra nd, based on their unique needs. • Any pair of work centers that has a large numbe r of goods moved between them should be placed in close proximity to each other (like food items and non food items). • Their main challenge is to arrange resourc es to maximize efficiency and minimize the waste of movement 1. 2. 3. 4. 5. Lowe r capital intensity & automation Higher labor intensity(Shelf placement) Resourc es have greater flexibility Processing rates are slower(everything is manual) Ma terial handling costs are higher(They have to replace the defective one) 6. Sche duling resources & work flow is more complex(More than 300 Employees) 7. Space r equirements are higher(Due to inventory but in vertical way) FIXED POSITION LAYO UT • Racks on which products are being placed is not moveable and building is also a fixed layout • The challenge is scheduling different work crews and jobs and ma naging the project.

 

TYPES OF STORES • Classic • Junior • Echo CLASSIC This kind of layout is above 10,000 sqm JUNIOR This kind of layout is equal to 10,000 sqm i.e 120 kanals ECHO This l ayout is between 5000-6000 sqm TYPE OF LAYOUT BEING USED IN PAKISTAN Metro Pakis tan is using the “junior” Layout Advantages of Proper Layout Planning • • • • • • • Proper La is it self Marketing of products. Critical in building good working relationship s Increasing the flow of information Improving communication Promoting the visib ility of key items in retail business Contributing to customer satisfaction Cust omer convenience

 

WAREHOUSE LAYOUT • Metro has its warehouse at Sharakpur which is known as the “Metro Platform” • They use the “Proactive approach” • Metro itself is a of kind ware house • To l ocate the inventory & order placement, Metro has a software known as GMS Supplie rs  Metro is outsourcing this service by hiring “Logistic Company” for transportation services Metro has its own suppliers who supply directly to its warehouse from all over the world & local suppliers supply both to Metro & its warehouse  Custom ers Metro is catering not only for the customers of Lahore but also outside area s like Gujranwala, Sheikupura & Sargodha Labor In metro, most of the work is bei ng done by the labor. So it is important for Metro to choose such a location in which labor supply is adequate Site considerations

 

Metro also considers the following factors while choosing the location, they hav e local zoning & taxes, access to utilities, utility cost, soil conditions, clim ate, adequate drainage, approach roads, parking and etc. METRO DEFINING QUALITY   Value for price paid People who purchase products from Metro feel that they char ge the right amount for goods that they usually buy.  Support services Metro give s warranty depending on the type of product purchased. Example it gives warranty on its electronics.  Psychological It has a good ambience, staff is friendly & r esponsive. “Continuous Improvement & Metro”   Proper shelf placement & training of sta ff Metro trains its staff by two process: o Process o System    It has its own in-h ouse training organization called HOT (House of Training) They also send their s taff abroad for proper training They use “train the trainer” approach Team Approach They have a team of more than 300 employees working as a team

 

Quality Awards and Standards Metro maintains their quality by the standard of IS O 9000 “COMPARATIVE ANALYSIS Regarding competition” There is one major competitor in pakistan’s whole sale industry and that is Makro. • Both use News papers, internet, pamphlets and book lets because it contains detailed introduction about the bus iness and its products. • Both Metro and Makro are in a wholesale business • Both Sp ent not much on Marketing campaigns • Metro believes in the concept of insource wh ile Makro outsources its food production • They both have teams for customer servi ce • Metro has trained staff while Makro has just hired sales person • Metro has pro per shelf placement of products whereas Makro does not • Metro follows the same la yout all over the world and Makro does not

 

• Metro places its inventory in its store and warehouse, while Makro places invent ory only in store it does not has any warehouse • Metro hire logistics for transpo rtation • Metro focus on proper shelf placement of products while Makro has not pr acticing this. SWOT Analysis of Metro Opportunities: 1. Changing trend of shoppi ng, people prefer to go the place where they can find maximum variety under one roof. 2. Metro is planning to open new stores at different locations. 3. Company name itself is an opportunity as “Metro” itself is a very popular name and they can expand business with any company they like to. 4. People are coming more toward s hygienic food. Threats: 1. 2. 3. 4. Launch of Wal-Mart in Pakistan. Inflation Government instability Terrorism Strength: 1. Largest whole seller platform. 2. They are selling few products with their own brand name. 3. Metro don’t spend mone y on advertisements through electronic media. 4. Metro is operating their busine ss according to the buying pattern of the customers. 5. Metro Values its Employe es and Customers. 6. Defined format adapted to local market needs

 

7. Efficient and low-cost operations Weakness 1. 2. 3. 4. 5. Not providing goods on credit bases. Location of the store is quite far away. Only deals in wholesa les. Relatively poor security check and balance on few items. High priced import ed items. 4 P’s at Metro Product: They give more attention on Fast moving consumer goods but they don’t give service after sale because they follow such standards w hich cause 0.2 % error occurrence ratio regarding defected products Price: if we observe the prices of Metro then we come to know that they are providing unique prices as compare to their competition ,they give quantity discount to their cu stomer most of the time and which is their core competency with respect to Indus try of whole sellers. Promotion: when we observe their Promotion strategy then w e see that most of the time they promote their name with the following promotion s. • • • • • News Papers Magazines Bill board Pamphlets Catalogs

 

Place or Placement: When metro came in Pakistan it observe that Makro its major competitor was operating in that area where people face so much traffic problem so they chose the place in Lahore near Thokar Niaz baig road which was less traf fic area customer have motorway (highway) to reach here even from other cities. And they place some products to customers at their desired place but it requires specific amount and distance regarding shopping. Tactical issues & queues Metro faces many tactical issues because they have to change their inventory after ev ery 14 days on Thursdays. They need very active workforce which shifts inventory from the top into the shelf space for this. On the cash counter they face probl em of queues. Positioning or segmentation Issue Metro position it self as a whol esaler brand in Pakistan but people who don’t have retail stores they also come he re and do shopping ,according to our analysis and their advertisement the target only businesses and they should position their brand also for ordinary customer s who use products in their homes. Ifmetro we analyze rices of makro and other whole saleCompetition’s markets then Prices we can issues see that prices the ar p e almost less than all so in order to maintain prices metro face problem during setting customer prices because customer select those whole sale markets who off er maximum discounts on quantity and transportation. ---------

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