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Carrefour: Managing the

Global Supply Chain

Maastricht University
School of Business & Economics
Date:
6.1.2015
Name, initials:
Manuel Peralta Recart

About Carrefour

ID number:

6119255

Course :

Global Supply Chain

Tutor name:
Course code:

Management
Janina Nowak
EBC2030

Carrefour S.A is a French retailer with a global coverage and also one of the largest
retail groups in the world. Carrefour operates in Europe, Asia, Africa, Latin America
and the Caribbean. They started operating in January 1958 in a suburban area of Paris,
France by Marcel Fournier, Denis Defforey and Jaques Defforey (Carrefour, n.d.).
Case Summary
The case is centered in how Carrefour invested on a $170 million project to standardize
their business systems and processes through their stores across the globe.
To do this Carrefour elaborated some key activities like involving shared service centers
(SSCs) in order to increase the efficiency of their supply chain through centralizing the
procurement activities, increasing the interaction between stores and suppliers, and by
developing a common accounting and information system platform. The SSCs solved
the lack of integration in the global supply chain.
Carrefour also had a proper use of IT in order to enhance the efficiency in their supply
chain especially in procurement, warehouse management and logistics.

Questions for discussion.

1-In tune with its global vision, Carrefour streamlined and standardized its supply
chain processes in various countries. Explain how shared service centers (SSCs)
helpedthe company streamline its procurement process.
Initially Carrefour operated with an Electronic Data interchange for the procurement of
goods. But in the mid 1990s when they started their aggressive expansion they needed
to standardize their business systems, processes and operations because they faced the
problem of missing an integrated IT in their supply chain.
For that reason they came up with the solution of developing the Thales project. That
project focused on developing a common accounting and information system platform
that would highly contribute solving the IT difficulties of the company. The Thales
project was centered in developing shared service centers in all of the countries in which
they operated. The SSCs are where the interaction takes place between shops and
suppliers, and also provide catalogues and useful information for the suppliers.
The SSCs came along with multiple benefits for Carrefour. One of them was the
mechanization of procurement process. As mentioned before, they provided an
electronic catalogue that included all the products they supplied in each and every one
of the stores worldwide with their corresponding price.
Also the orders they received in the different SSCs were combined and together they
elaborate a final order. Through this they had a better control of the information and
they could manage it in the most accurate way.
There are multiple benefits with the automation of the procurement process. One of
them is reducing the documentations, with this it easier to handle the information,
reduce the time spent on reading and reduce risks associated with errors made by
individuals (Stehle, n.d.). Lesser documentation also decreases considerably the
operation cost, mainly because it reduces the labor cost and paperwork.

Also with automation improves the transparency of the company. Information is now
observable, clear and accurate for their stakeholders (Stehle, n.d.). This improves the
quality of the relation with the stakeholders and as a consequence the trust.
Therefore SSCs considerably helped Carrefour streamlining in their procurement
processes because they were able to communicate and collaborate in a more effective
way with the suppliers they have worldwide.
2.1- Explain how Carrefour used IT in Warehouse Management.
Retailers such as Carrefour integrate IT systems that optimize processes in their supply
chain. Technology plays a key role when keeping the correct amount of stock in stores
and the lowest possible inventory levels in the warehouses.
IT can be considered as the processing of information using computers. Integrating IT in
the correct way can considerably improve the supply chain and operations effectiveness
of companies, and therefore decrease costs leading to a competitive advantage
(Ghorban, 2011).
The use of IT totally restructure the previous supply chain models used in the 80s and
90s, reaching higher level of effectiveness due to decreasing inventory and distribution
costs and mistakes, therefore IT is definitely a requisite to be competitive in the market.
IT also contributes considerably in the flow of data and goods across the supply chain.
Applying IT facilitates the management and coordination of activities between supply
chain members (Ghorban, 2011). Using IT makes the transfer of information much
faster that in the last decades paper based transfer of information. Even communicating
was much more complicated than now with the use of e-mail, fax or other messaging
platforms.
Carrefour used the IT in Warehouse Management through Warehouse Management
System (WMS), with this they could take orders, schedule deliveries from the
warehouse to the stores and monitor the delivery. This system also contributes
optimizing stock retention in warehouses due to the information provided by the IT
platform.

Carrefour used IT also through radio frequency scanning equipments in their products to
keep them tracked. They equipped their products with bar-codes, that allowed to
monitor their supplies closely from the warehouse to the final delivery destination.
As we can appreciate using IT in warehouse management can be really useful and can
provide multiple benefits to the company. Optimizing the space utilization in the
warehouses is also relevant, this because an appropriate tracking decrease the stock
levels and therefore they can optimize the space utilization.
The management of the inventory in stores also improves, this because they can detect
when one of the stores is about to run out of stock and they can act before it becomes a
problem.
Carrefour was benefited also from implementing IT in their supply chain through
optimizing their time management. Keeping tracked the products facilitate a smooth and
monitored distribution and as a result they reduce the wasted time that they spend
communicating by telephone or fax as they did in past decades(Ghorban, 2011). The
accuracy level of the inventory increased into a 99,97% applying this tracking system.
To conclude applying IT in the warehouse management system optimize the receipt,
storage and move of the goods to a warehouse or to stores.
2.2 What elements of Supply chain must a company Customize and what it should
standardize while managing a global Supply chain?
Companies nowadays must customize some of the elements in their supply chain in
order to stay competitive. Companies must be adaptable, they must have the ability to
be flexible and be able to adjust to changes and requirement of the market as also shifts
in technology (Yashada, 2014). For that reason they must be informed and have a quick
response when new trends are coming up.
Every year new technologies are coming up and some firms are leaving behind because
they cannot catch up to the requirements of the industry to stay competitive, that is why

is highly relevant that companies develop in a continuous improvement environment


(Yashada, 2014).
A global supply chain company face multiple laws and regulation through the different
countries and with it different customs and transportation costs. For that reason they will
need to constantly be informed and looking for new alternatives to keep to costs low
and optimize the flow of the processes.
However, companies nowadays also need to standardize some elements of their supply
chain in order to stay competitive. Standardizing is the process where companies
establish norms and regulations through documenting them (Yashada, 2014).
Companies must standardize some of their elements among them the logistics,
procurement and warehousing.
Logistic processes of the supply chain must be standardized in order to keep all the
distribution channels working in the optimum way. This contributes decreasing costs
and achieving global economies of scale.
In addition, it provides a parameter of how will companies execute their supply chain in
different circumstances.
To achieve a global supply chain it is a requirement that companies have standardized
processes so they can perform their logistics in the cheapest and faster way through the
different countries. When standardizing the procurement processes the suppliers will
have the requirement of providing their goods on time and with the required quality.
Standardizing the warehouse management systems is also important because enables the
company to keep a set level of inventory and decreases the chances of overstocking or
of stores running out of stock and facilitate the information sharing to stakeholders.
Keeping a standardized IT system is highly relevant for organizations. Global IT
standards contribute on reducing the cost of operations, mainly because the
technological system is already developed and decrease the amount of labor work.
Also standardizing IT increase the reliability and transparency of the firm in a way that
having the processes already established across the globe ensure a quality supply chain
in the countries that the firm perform (Yashada, 2014).
Finally we can appreciate that standardizing is more suited for global issues of the
company while customization is more suited for local issues.

3.1 Carrefour is one of the most Global retailers in the world. Prepare a plan for
the company to effectively integrate its supply chain operations across borders.
In order to effectively elaborate an integrated global supply chain they must be able to
integrate different stakeholder and processes into one functioning system (Awad &
Othman, 2010). In order to achieve that, Carrefour will have to face some challenges in
order to stay competitive.
They will need to be constantly aligned with the market needs, providing goods
according to the local trends across the different countries where they are present (Awad
& Othman, 2010). To be able to accomplish that they need flexible supply chain
processes. In the Carrefour supermarkets of some countries the products that are
procured locally can reach even 90% of the whole store. That reflects that every country
have different cultures and consume different things, that is the reason why Carrefour
adapts to the requests of every country by keeping a 3PL outsourcing strategy. Doing
this they have a shorter supply chain and keep to costs lower.
To effectively integrate a global supply chain they have to keep a good relation with the
suppliers. Its highly relevant to earn the trust of them and keep them satisfied with their
requirements all the time and also by providing them clear and reliable information
about the business (Awad & Othman, 2010).
Carrefour will additionally need a IT system that monitor the performance of the stores,
determining if the goals are being achieved or if they need to improve the strategy if
they are not. They will need to communicate to the stakeholders if something goes
wrong and provide an effective solution to the problem. Also they must keep a
technological system that optimizes the logistics of they supply chain in order that the
transportation of goods is done in the most efficient way (Awad & Othman, 2010).

3.2-What issues will the company face in integrating its global supply chain
operations? And how should it overcome them?
Carrefour keep growing every year and facing a competitive market, for that reason they
will face some problems related with their global supply chain operation.
Carrefour managed around 12.000 stores on 2014 and it is highly probable that they will
keep on opening stores and consequently the complexity of their supply chain network
will increase also.
As mentioned before, Carrefour work mainly with local suppliers across the globe,
therefore opening new stores will increase the suppliers and distributors network. In
occasions, suppliers do not provide the goods on time or either product do not reach the
quality standards required. Other challenge that Carrefour can face with their suppliers
in their global supply chain operations is through delays and interruptions in their
processes.
Dealing with multiple suppliers in different parts of the world can be a serious problem.
Local companies going on strike can be a challenge for the company because it will
disrupt the supply chain. For that reason managers have to make sure of finding reliable
suppliers that provide a consistent service of quality in order to keep their processes
successful (Awad & Othman, 201).
Also they can face problem with the local economies and policies of each country. For
instances, customs can complicate the exportations of Carrefour white labels that will be
soon delivered into each supermarket across the globe. The policies of the countries can
be a problem also because new regulations and policies can interrupt the production of
some product and will disrupt the supply chain in that way(Awad & Othman, 201).
Economies and policies may even cause the bankrupt of one of the suppliers. For that
reason it is necessary to have mitigation strategies to reduce of those risks. In order to
avoid a threat in the supply chain they will need backup strategies that reduce the
impact of situation and keep the processes as smooth as possible. That is why it is
essential that Carrefour manage IT in a way that support communication and global
supply chain operations will require a high level of communication to remain
competitive

References
Awad, H., & Othman, M. (201, March 17). Supply chain integration: definition and
challenges. Retrieved from
http://www.iaeng.org/publication/IMECS2010/IMECS2010_pp405-409.pdf
Carrefour. (n.d.). CARREFOUR > Group > History. Retrieved from
http://www.carrefour.com/content/history
Ghorban, M. (2011, August 29). How Technology Can Ease Supply Chain
Management and Mitigate Risk. Retrieved from
http://www.supplychainbrain.com/content/general-scm/quality-metrics/singlearticle-page/article/how-technology-can-ease-supply-chain-management-andmitigate-risk/
Stehle, T. (n.d.). Top Five Reasons to Automate Inventory and Procurement, by Tina
Stehle. Retrieved from http://hotelexecutive.com/business_review/2044/topfive-reasons-to-automate-inventory-and-procurement
Yashada, P. (2014, January 1). Standardization and customization. Retrieved from
http://es.slideshare.net/Hjyotsana/standardization-and-customization