Carrefour’s Distribution System

This post is also done by Sina http://sinaslogisticsblog.blogspot.com/ and Janina http://logistics-janina.blogspot.com/ and it deals with the distribution system of Carrefour.

1. Introducing Carrefour




To find out information on carrefour's business, we had a look at the "at a glance" presentation of Carrefour
Boasting four hundred parking spaces and 2,500 sq.m of sales floor area, the first Carrefour hypermarket opened in 1963 in Sainte Geneviève-des-Bois, close to Paris.
The concept was entirely new -



everything under one roof



in a self-service environment - and was an overwhelming success.



Carrefour then deployed and exported its business model
Today, it is the largest private European employer and the 7th largest worldwide.
Carrefour group offers its customers every type of retail shopping:




• 498 hypermarkets


• 2,198 supermarkets


• 3,267 hard discount stores


• 2,143 convenience stores


• 196 cash & carry stores


• 503 frozen food stores




More facts about Carrefour



• It is no. 1 in europe and no. 2 worldwide


• €102,442 billion in gross sales under group banners in 2007


• Present in 31 countries


• More than 490,000 employees including more than 140,000 in France


• More than 3 billion cash transactions per year


• Largest private European employer and 7th largest worldwide





2. Material flow: Reducing Carbon Emissions


Since Carrefour delivers huge volumes of products to hundreds of stores the optimization of transport and logistics is indispensable.
The following figure shows how Carrefour manages its material flow and at the same time tries to reduce carbon emission:




http://www.carrefour.com/docroot/groupe/C4com/Commerce%20responsable/Notre%20engagement%20pour%20l%27environnement/R%C3%A9duire%20nos%20impact%20logistique/infography%20CO2.pdf


One measure Carrefour takes is to focus its efforts to the reduction of the number of kilometres travelled by road. In general, the Group tries to develop a national logistics network in every country where volumes are big enough. It streamlines flows and transport trips by pooling logistics.
In the following paragraph, some steps are explained more in detail:



• Using alternative modes of transportation: Nowadays Carrefour tries to find alternative means of transport for deliveries to Group warehouses. They want to increase in the number of containers delivered by barge and by rail. Carrefour France for example, achieved its goal to ship more than 40% of its merchandise by river and rail. In Spain, Carrefour dispatches 100% of its import containers from the port of Barcelona by rail and 67% from Valencia.



• Developing Backhauling: The latest innovation of Carrefour is to have trucks that collect goods ordered from suppliers and that deliver them to the warehouses after completing their store deliveries.



• Creating consolidation warehouses: Another method Carrefour uses is to set up consolidation platforms. These platforms make sure that suppliers can reduce their mileage and that Carrefour can send the warehouses full trucks that contain products from several suppliers


Please refer to: http://www.carrefour.com/cdc/responsible-commerce/our-commitment-to-the-environment/reducing-logistics-impact/





3. Material flow: Further Improvements

Since one day saved in terms of worldwide inventory for Carrefour represents $183 million, the retailer has asked key suppliers to help manage inventory. This way 60% of Carrefour's inventory is now controlled and co-managed by key vendors until it arrives at the stores.

Consigned or vendor-managed inventories, consisting primarily of seasonal merchandise and such direct-to-store products as ice cream and soft drinks, are held until needed, then released to the stores.
Carrefour has developed closer relationships with fewer suppliers. This way they have identified 30 suppliers that account for 65% to 70% of thei business. They don’t only ask their suppliers to help them manage the inventory but they also want them to deliver products to the stores ready to sell. This helps to eliminate a lot of store work to prepare those products for sale.
These information are retrieved from: http://webcache.googleusercontent.com/search?q=cache:N3NO5uLMTYoJ:findarticles.com/p/articles/mi_hb3235/is_11_21/ai_n29112115/+This+way+60%25+of+Carrefour%E2%80%99s+inventory+is+now+controlled+and+co-managed+by+key+vendors+until+it+arrives+at+the+stores+represents+%24183+million&cd=1&hl=de&ct=clnk

Some of Carrefour's producers are local while other goods are bought by bulk purchases or global sourcing. That means that Carrefour has to organize the whole transportation to its retail stores.

Carrefour manages flows of finished products to ultimate customers. This is a critical activity for them because they cannot have empty shelves since this would contribute to unsatisfied customers. Each day, 8 trucks are needed to deliver products to one hypermarket!

Carrefour's distribution channels can be divided into three networks:
- grocery products which stay a very short time in warehouses for hypermarkets
- the same products for supermarkets, convenience stores and Promocash
- products which stay a bit longer in warehouses, and that are delivered to all formats of stores

This new system shortens the time for the delivery. With a so called "multidrop system", only one truck is used to transport products from a manufacturer to two close warehouses.

Carrefour owns many huge logistics platforms (distribution warehouses). They are used to gather products from different manufacturers, and redistribute these products to the different stores whenever they need them.

Also technological tools have been introduced to prepare orders. The employees are helped by a vocal recognition tool (pick by voice), in order to avoid any mistakes.
The latest change in the material flow of Carrefour is that manufacturers used to store finished goods in their own warehouse, and then, the goods were transferred to Carrefour warehouses. Now, Carrefour wants a direct transport of the finished goods from the manufacturers’ to Carrefour warehouses.
Please refer to: http://eleves.mines.inpl-nancy.fr/~guerri99/Documents/Carrefour_Report_2.pdf


4. Information Flow

In Italy, Carrefour uses of a software program that is capable of adapting the daily delivery plan to changes in order volumes. A result of this is that the mileage has been reduced by 5% and costs by 7%.

Carrefour focuses on the information flow between the stores and the warehouses.
Therefore logistics services started to work with stores in order to review their systematic daily supply activities. They introduced more flexible hours and deliveries based on the realistic needs of the various departments. This approach has several advantages:



• There is the possibility of carrying out back-to-back delivery runs with the same truck


• This way less time and fuel are wasted in traffic jams


• There is an improvement of the filling of trucks



See: http://www.carrefour.com/cdc/responsible-commerce/our-commitment-to-the-environment/reducing-logistics-impact/

We have found more information on http://eleves.mines.inpl-nancy.fr/~guerri99/Documents/Carrefour_Report_2.pdf:
In general it can be said that the development of technologies has been very important for the development of Carrefour. The main technology that has been useful is the computer. The Internet allows Carrefour to develop new kinds of activities like the online supermarket. But the most important point with the Internet is the creation of a B2B extranet.

This extranet makes it possible that suppliers can manage their relations with Carrefour group more easily and more efficiently so the information flow is guaranteed and is smoother.

Carrefour uses sophisticated software to create an efficient link between sales and purchases. They use "push-pull-push" logistics. This means that on the one hand they do forecasts, but on the other hand they control regularly what is sold in the stores on a daily basis order to adapt their inventory.