SUPPLY CHAIN MANAGEMENT

FINAL REPORT ON

CASH & CARRY

SUBMITTED BY:
Muhammad Nabeel Shahzad Siddiqui (3851)

Faizan Iqbal (3696)

Hammad Ahmed (3694)

Haseeb Ali Khan (3847)

Nida Iqbal (3782)

 REPORT ON MAKRO CASH & CARRY

Saba Zuberi (3680)

SUBMITTED TO:
Mr. Sohail Majeed

TABLE OF CONTENTS

 Executive Summary……………………………………….. 3
 Company Profile……………………………………………. 4
 Nature of business…………………………………………. 4
 Purchasing………………………………………………….. 6
 Purchasing Process…………………………………… 7
 Logistics……………………………………………………. 7
 Existence of Third Party Logistics………………… 8
 Logistics within factory…………………………….. 9
 Shipments to Individual Customers……..………… 9
 Cross Docking…………………………………….... 9
 Pull Strategy……………………………………….. 10
 Warehouse Management…………………………………. 10
 Warehousing Process…………………………... 10
 Technology Used In Makro…………………… 11
 Inventory Management…………………………………… 11
 Inventory Keeping…………………………………. 11
 Inventory Accounting……………………………… 11
 Weaknesses and Suggestions………………………… 12
 Conclusion………………………………………………… 13

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EXECUTIVE SUMMARY

This report presents a new frame work of Supply Chain Management of Makro Cash and Carry.
Makro Cash and Carry is a whole sale center who caters both type of business buyer and normal
buyer it’s a joint venture currently working in Pakistan’s two states Karachi and Lahore with two
hundred employees they are planning to open more new 8 outlets in Pakistan which will boost
the economy as they are investing around 500$ million in this project which will give the
turnover of 1280$ million monthly on 8 outlets this will give the employment opportunities.
Makro Cash and Carry deals with all type of product like it caters kitchen to office. The supply
Chain of Makro Cash and Carry is discussed in detail in this report which will help you to
analyze the effectiveness of Makro Cash and Carry here we discussed the purchasing tools and
techniques, warehouse system effectiveness, transportation and delivering strategies where they
can improve as we always have a portion to improve.

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COMPANY PROFILE:

Makro Cash and Carry is a wholesaler who deals with all type of customer its headquarter is in
Netherlands as a brand Makro and in Pakistan they start with the collaboration of house of
Habib with the name of Makro Cash and Carry right now they are working with 5 working
station in Pakistan 3 in Karachi and 2 in Lahore and planning to open 8 new more store by the
end of this year in Pakistan with the investment of 500$ million 300$ million from house of
Habib and 200$ million from foreign they estimate that the monthly turnover of one center will
be around 160 million

Makro Cash and Carry controlled the price in this inflation period and help those who hate
bargaining they have a wide range of food and non food items which give a sophisticated touch
to your shopping plus safe your travelling cost and valuable time by giving you each and
everything under one roof. Makro Cash and Carry it provide growth to customer by giving them
at best price their mission statement is excellent distribution of products with best price, quality
and variety to customer.

They also provide free delivery as well on required amount of shopping which is a big benefit in
Pakistan because arranging a vehicles is a difficult job, it is a important link between
manufacturer to customer. Makro Cash and Carry they are supporting energy efficient plans and
designing their new stores with this theme their staff is fully trained and instructed to work on
these three golden rules reduce, reuse, and recycle.

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NATURE OF BUSINESS:

Makro Cash and Carry are a wholesaler company which work in every type of product with both
type of customer business buyers and normal buyers their customer are schools, universities,
colleges, hospital, hotels, restaurant, retail shops, bakeries and house wife. They are contribution
everything on a very competitive price and with consistency of availability of goods as their
motto is to develop long term relationship with their customer or client which will be mutually
beneficial for all. they have a very pleasant environment where families can enjoy shopping they
have a very good baby sitter glass room where you can drop your children and can enjoy your
shopping in that glass room your child have lots of activities to do like coloring, painting,
watching Disney cartoon rides and much more this is the most eye catching area for parents.

Makro Cash and Carry is made for the benefit of people who can’t travel all day long from one
place to another fighting with traffic jams and lack of car parking just to get a daily usage things
with the variation of prices they fixed the price and give guarantee to the customer of the quality
plus they have a extensive car parking around 300 cars can be parked at a time in Pakistan what
else a man with family want its more than a blessing for them. The discount they offer, to their
customer is really attractive and we can say mouth watering for bulk buyers people enjoy their
Ramadan packages where they offer a cut down sale which is a blessing for Muslim people.

SUPPLY CHAIN GOAL:

The goals of Supply Chain at Makro are to professionally handle thousands of orders, shipments
and deliveries and make sure that goods arrive at the right place at the right time. Supply Chain
Management plays an important role in our high performance logistics system and increases their

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capacity to supply food and non-food products on a daily basis with reliable high quality, variety
and freshness.

PURCHASING

To provide the affordable cost to its customer Makro always willing to reduce its purchase cost.
They always buy product when they assure that that product is not available on the other places
with cheaper rate. They know the value of reduce cost purchase raw material for their business to
fulfill their objective of standard products and cheap sales to the customers.

As recession hit the market badly even though Makro is able to provide standard product to their
customer at a very cheaper rate. They are able to sold every product from there store which
customers unable to buy during recession. There growth is constant across the whole market.
There sales volume and market shares increases drastically. Their previous year volume increase
by one third but this year increase even better as it was increase at the rate of two thirds of their
business. The main reason of it sustainability is that they sales there product cheaper than others
but they are still able to be in a competitive advantage over the other competitor.

Makro tried to satisfy their entire customer whether they belong to a high class our weather they
belong to middle our lower class family status, they satisfy their customers because they are
providing standard product at prohibitive price.

Suppliers are very important in the eyes of the company that’s why Makro give so much
important to its suppliers. They are very willing to make strong relationship with the suppliers.
When there is a change in purchase they use their strong relationship with the suppliers and
overcome the problem and gives relief to the customer as demanded. They never forgo any cost
saving opportunities. They save the cost of their purchase as it directly effect to its customers.

Makro purchase on bulk basis that why they are hired those staff who have the beat convincing
and negotiable powers. Because of negotiable purchase the prices of their product varies on

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every month. The policy that is being employed by Makro is to give benefits to their customers
for which they provide suitable discounts which is now a days the requirement of all the
customers, through discounts they get more and more customers who generate greater revenue
for them. There discounts are much more less than their other competitors insure that customers
only get attracted to their retail store.

PURCHASING PROCESSES:
The purchasing processes of Makro are up to the mark as they do every possible effort to
maintain their inventory. When the inventory reached to its lowest quantity as per management
policy, their management system refers the notice to buy the product up till the inventory is out
of stock. To save the time and money and save the purchasing and other cost they buy the
product when they are needed. Makro have the policy not to make the inventory in the
warehouse for so long that’s the reason they buy less in bulk. They ordered for products to
purchase twice in the week. The suppliers distribute the required product to the Makro center in
the working days. The supplier can only be place order when Makro negotiate the price, services
and quantity is done. Makro gives a specific documentation to the supplier for product
specification.

LOGISTICS

Makro cash and carry brings a new concept in Pakistan. Makro drive small number of outlet in
the starting. But makro have problematical items of greater than 1400 items include vegetables,
fruit , fish, all types of meat, motorcycle etc. Makro make the half of the sales for individual
customer.

Average 200 employees are directly employed in outlet. But if we incorporate all employee
who’s indirectly associated touch ing the operations that is supplier, transporter in that case the
number of peoples exceed thousand or more then on that figure involved in Makro logistics.

The numbers of outlet will increase in future as they opening a more outlet in the major cities in
Pakistan and its is more benefit for peoples of Pakistan and they generates more and handsome
revenue by spread their business and logistical area.

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EXISTENCE OF THIRD PARTY LOGISTICS:

Makro cash and carry use third party logistics to satisfy their logistical business need.

Involves transportation to assort others resources who finding the easiest way as the part of the
Makro because quick payments in the limited time.

Makro mostly have the own transport contracts. They work for right time in the right place with
quality work. The imperative attribute of makro logistics is fast and well structured transport
system. The distribution centre of the makro involved trucks and other vehicles like mini trucks
load lifters with the help of this truck makro shifted the inventory from distribution center to
store room this movement of this trucks acting vital role in between distribution centre and store
room. They employed skilled and trained staff for done the quick and rite operation and this is
the result of good pay scale and give the job security is per contract.

Makro supervisor give the instruction to the workers and also delegate authority for making
decision on time. They also guide to the worker what is the plan for next step to be taken to
satisfy the consumer wants and this is the prime objective of the makro. Many organizations pick
third party logistics only for the convenient to minimize the cost and give good service, but
makro cash and carry has its own transportation system for quick excess to supply customer
demand for keeping to reduce cost(under control).

Makro is not betrothed in transportation-in for the procured items. It is the mandatory
responsibility of the suppliers to send off their products at Makro centers to make sure that the
products are delivered at the right number at right moment and in the right mode. Makro’s
customers are required to carry off their purchased items by their own automobile that is why
Makro is saving its logistics cost as well as time to reduce risk of damages.

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LOGISTICS WITH IN FACTORY:

Inventory move within the premises of warehouse with the help of fork lifter, mini cars, palettes
and etc. one of the factory warehouse distinguish makro from other because they have wide
parking space and this is the more convenient for transportation. Many families don’t visit to
other outlet just because of parking space. Makro has a good space for family event. Visitors
come in makro for quality product easily available in a one roof with competitive price and also
makro has a good place for eating area (get together). They don’t have any security issue in
makro. The internal logistic of the makro working in the manner that no one employee do not
interfere to the work of other employees.

Makro have own transportation system and this system is running with very skilled and
experienced persons that means that the makro transportation system give the 100% to makro.
Internal logistics of makro is good because makro done the special KPI.

SHIPMENTS TO INDIVIDUAL CUSTOMERS:

The shipment is not entertained by makro to individual customer. Makro has no matter to
purchase in bulk or small quantity, because this is more expensive and a highly risk involved in
shipment that’s why makro is not dealing with it.

CROSS DOCKING:

To make makro distribution process is more efficient and flexible for makro logistic technique is
called cross docking. It is work in just in time technique cross docking finished products are
directly lifted from the manufacturers and after sorting it out handed over to the customers who
are their retailers and many times institutional customers. Through cross docking the makro

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reduces the cost in a positive manner because they have to store the more inventories in
warehouse that means that we must have own or big warehouse and this is very expensive to
manage the warehouse. That’s why makro use cross docking.

Makro use cross docking specially for perishable items like chicken, fruits and vegetables. All
other items will rotten in few hours and this may be very riskier to eat that why makro uses this
logistic technique of cross docking. Through cross docking with certain product the lead time is
very important to prevent the rotten items and this is heavy losses of makro.

Through cross docking technique the electronic item in cross docking system shifts to order
place so that why it’s no chance to go out of stock. The supplier knows that the is the lead time to
placed the order so supplier is very conscious and care.

PULL STRATEGY:

The one of the most achievement story of makro is adoption of cross docking. Through cross
docking system can change the SCM into the demand change. It means that the retailers has no
more influence to increase the sales but the customers to demand more, as the quality
management by Makro is higher as the wall-mart’s strategy .by the help of this strategy makro
find is more convenient way to what is customer demand , what is requirement are in makro. If
the any product of makro lost its sales so its mean that the more focus on that particular area
where the lacking is going on and done the wrong work so you must do work again for their
customer.

WAREHOUSING MANAGEMENT

WAREHOUSING PROCESS:

Makro Cash and carry have no warehouse; its selling outlet is also used as warehouses that
accumulate massive warehousing expense. It have two warehouses one is front area where we
are doing purchasing and other is of back store where surplus inventory are keep for packaging

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and labeling barcode tags for its keeping record and which also help in prevent from theft. A
supplier is limited to supply their inventory between 9 to 5 p.m. All the inventories are kept in
the right state at the right specific section to make sure its best superiority and display which
catch the attention of buyers.

TECHNOLOGY USED IN MAKRO:

Makro are fundamentally use Barcode and a little bit RFID for goods management, moving to
store, keeping stock in smart shelves, and moving of inventory within the outlet, so if any
manufacture is not have the barcode printing facility, they are mandatory to purchase barcodes at
Goods getting unit and consequently forwarded to back store warehouses. As many received
goods are outfitted with RFID-chips (pallets, boxes and cases), the individual tracking and
tracing of the products is been significantly improved. In this way, the total supply chain is
record. In place of by hand calculating all the received goods, the employees manage the
inventory via PC and with the PDA-equipment in a greatly superior way.

INVENTORY MANAGEMENT:

KEEPING INVENTORY:

Makro is using vertical inventory system to utilize its maximum space more efficiently and
effectively. Due to this Vertical system the inventory is easily accessible. It also saves labor, coat
& time to arrange that inventory in racks.

ACCOUNTING INVENTORY:

FIFO inventory system is used by Makro for recording and selling to follow that there is less
chance of inventory damaged due to expiry date. FIFO method is generally used in under

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developing countries like Pakistan due to increase in inflation rate and insecurity from consumer
likely.

WEAKNESS AND SUGGETIONS:

CHOICE OF LOCATION:

Location plays a vital role in SCM. A good location saves you cost as well as time. If you chose
a low cost location which is not visible to customers. If you have a location outside the city, so it
requires a travel to customer which is very difficult nowadays. Makro-Habib Store (1 st centre) is
located at Manghopir Road, which is quite unsafe both for shopping and vehicle and requires a
lot of travel for customers living inside the city.

SUPPLIERS TIME WASTE BY GODS RECEIVING DEPARTMENT:

Suppliers face a problem from Makro Goods Receiving Department GRD. Because their vehicle
have to stand in queues and the timing of GRD department is not suitable for them i.e. 9:00am to
5:00 pm due to Pakistani’s business environment.

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CONCLUSION

Supply chain management is now working as they competitive advantage for the company’s to
measure the future growth of a company this will predict the investor or a client the ratio of
profit as many big business man said that’ “ the organization who works with the best supply
chain practices in their working is the future leader as they minimize the error ratio in all
measures of supply chain which safe cost and we can decrease our cost to make our product
more efficient in the market” the company’s who use technologies’ like RFID, Bar Code and
Pick by Voice technologies are bringing a drastic change in Supply Chain industry of Pakistan.

The name of Makro Cash & Carry stands for one of the great success stories in modern
commerce. The unique wholesale B2C model of Makro Cash & Carry is focused only towards
their customers. Multi layered supply chain modal of Makro improve their shopping. They
provide them considerable and transparent price which all is possible only by consistent supply
sources.

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