ACKNOWLEDGMENT

In performing our assignment, we had to take the help

and guideline of some respected persons, who deserve
our greatest gratitude. The completion of this
assignment gives us much Pleasure. Primarily, I would
like to extend my profound gratitude to Ms. Seema
Meghani, Jinnah University for Women, our project
supervisor, for her intellectual input, criticism, and
comments throughout the drafts of this work up to the
final version. Her constructive advice and visionary
guidance shaped this work and made it a useful
university project material. Without her, this project
would not have been as beautifully and academically
written as it is now. We would also like to expand our
deepest gratitude to all those who have directly and
indirectly guided us in writing this assignment.
Secondly, I wish to express my special thanks to
the Dean
of Dept. of Business Administration &
Commerce, Jinnah University, for providing me with the
freedom to use facilities including computer, Internet
for Project reference materials, photocopies, papers,
printer, just to mention but a few. Without these
facilities, my project would have taken much longer, if
not expensive to accomplish.
Last but not least, my gratitude wholly is extended
to Mr. Anwer Hussain Essani, Mr. Aftab Punjani, Mr.
Saleem, Mr. Javed and Mr. Muhammad Ashfaq, Our
intellectual fathers who did all they could to enable us
pursue higher education. They guided us through rough
and tough with parental guidance during the formative
stages of our education. The list is long, and those who
not included here for one reason or the other, but
helped in many ways, are all appreciated.

EXECUTIVE SUMMARY
Supply Chain Management (SCM) practices govern the
selection of a suitable mode for the movement of goods and
materials within a given industry or environmental area. SCM
has undergone an evolutionary example. The pattern has
progressed from utilizing a single mode in a single region
following the movement of raw materials, through
manufacturing services, to the consumer; to multi-modal
solutions across an international land.
Supply chain management (SCM) attempts to create a virtual
vertically integrated channel, which is composed of several
owners and provides a flawless delivery of products and
services. Creation of such faultless process places a particularly
heavy burden on manufacturers, which must coordinate
upstream and downstream supply partners. By reducing the
length of supply chain, speed to market increases, inventory
decreases, and product supplied is better matched with product
demanded. In order to achieve these benefits, the time
between supplier production and customer consumption must
be reduced. The ability to provide a seamless delivery of value
to consumers is measured by both efficiency and effectiveness
Supply Chain Management (SCM) is recognized as a leading
process improvement, cost saving, and revenue-enhancing
business strategy. It applies to all businesses involved in the
delivery of capital projects. SCM requires a corporate proposal,
supported by strategic and strategic planning, to instill systems
thinking and promote a new discipline that companies must
master.
It is necessary to optimize supply chain leadership through
strategic innovation and association. Existing boundaries of
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firms need to become relatively absorbent and flexible. Capital

projects markets require a focus on structure collaboration in
relationships within and across key and often multiple industry
players.

METRO Cash & Carry Pakistan

METRO opened its first cash & carry wholesale center in Pakistan in 2007
& expanded to five wholesale centers in a short span of 18 months. In July
2012, METRO and Makro-Habib combined their wholesale business in
Pakistan marking the beginning of a long-term partnership to the mutual
benefit of both companies. The merger allowed METRO and Makro-Habib
to combine resources and gain the financial strength to lead and grow in a
challenging environment and to gain synergies targeted to generate value
for our customers and suppliers alike. Today the company is operating
nine wholesale centers in Lahore, Karachi, Islamabad & Faisalabad.
METRO-Habib Cash & Carry Pakistan is part of METRO GROUPs sales
division METRO Cash & Carry, the international leader in self-service
wholesale. The company operates more than 700 stores in 29 countries in
Europe, Asia and Africa and has a workforce of over 100,000 employees.
Sales in 2011 were approximately 31 billion Euros.

Concept
The company has a simple and efficient business concept: cash & carry
wholesale, which is defined through its customer base: only professional
customers are allowed to purchase at METRO-Habib Cash & Carry, all of
them duly registered and provided with a customer card. It is not a superor hypermarket chain for private consumption, but a modern form of
wholesale exclusively tailored to the needs of businesses and companies.
The core customers are small and medium-sized retailers as well as
hotels, restaurants and caterers. The company offers business customers
a comprehensive product range in both food and non-food and efficient
business solutions to enhance the customers competitiveness in their
own markets.
Head count of employees: 2300 approx
Wholesale centers: 09
Market Entry: 2007

Supporting Local Businesses

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METRO-Habib serves as a catalyst for growth by implementing a modern

trade infrastructure along the entire value chain: We offer local businesses
like small retailers and restaurants a reliable supply source of up to 90 %
locally procured goods as well as services to increase their
competitiveness. At the same time, we implement a modern agricultural
supply chain resulting in reduction of wastage and better quality produce.
In Pakistan METRO e.g. established collection centers for local farmers
providing them with the opportunity to sell their produce directly at a fair
market price. Through efficient post-harvest handling, methods introduced
by METRO a 95 % improvement in availability and quality was achieved.

Helping Pakistan Tap into Export Markets

While growing its business METRO-Habib will also enlarge its win-win
relationships with its suppliers: We reach out to local farmers and
producers by providing them with customized training programs to
address gaps in knowledge and technical skills helping them to grow in
national and international markets. Already 56 Pakistani companies
underwent training in the scope of the companies Star Farm initiative,
resulting e.g. in 20 traceable products Made in Pakistan, that have been
developed to promote local produce for export.

SUPPLY CHAIN MANAGEMENT:

Supply chain management (SCM) is the management of a network of
interconnected businesses involved in the ultimate provision of product and
service packages required by end customers (Harland, 1996). Supply chain
management spans all movement and storage of raw materials, work-in-process
inventory, and finished goods from point of origin to point of consumption
(supply chain).
Another definition is provided by the APICS Dictionary when it defines SCM
as the "design, planning, execution, control, and monitoring of supply chain
activities with the objective of creating net value, building a competitive
infrastructure, leveraging worldwide logistics, synchronizing supply with demand
and measuring performance globally."
According to the Council of Supply Chain Management Professionals
(CSCMP), supply chain management encompasses the planning and
management of all activities involved in sourcing, procurement, conversion, and
logistics management. It also includes the crucial components of coordination
and collaboration with channel partners, which can be suppliers, intermediaries,
third-party service providers, and customers. In essence, supply chain
management integrates supply and demand management within and across
companies. More recently, the loosely coupled, self-organizing network of
businesses that cooperate to provide product and service offerings has been
called the Extended Enterprise.

Problems Addressed By Supply Chain Management

Supply chain management must address the following problem:
Distribution Network Configuration: number, location and network missions
of suppliers, production facilities, distribution centers, warehouses, cross-docks
and customers.
Distribution Strategy: questions of operating control (centralized,
decentralized or shared); delivery scheme, e.g., direct shipment, pool point
shipping, cross docking, DSD (direct store delivery), closed loop shipping; mode
of transportation, e.g., motor carrier, including truckload, LTL, parcel; railroad;
intermodal transport, including TOFC (trailer on flatcar) and COFC (container on
flatcar); ocean freight; airfreight; replenishment strategy (e.g., pull, push or
hybrid); and transportation control (e.g., owner-operated, private carrier,
common carrier, contract carrier, or 3PL).
Trade-Offs in Logistical Activities: The above activities must be well
coordinated in order to achieve the lowest total logistics cost. Trade-offs may
increase the total cost if only one of the activities is optimized. For example, full
truckload (FTL) rates are more economical on a cost per pallet basis than less
than truckload (LTL) shipments. If, however, a full truckload of a product is
ordered to reduce transportation costs, there will be an increase in inventory
holding costs which may increase total logistics costs. It is therefore imperative
to take a systems approach when planning logistical activities. This trade-offs are
key to developing the most efficient and effective Logistics and SCM strategy.
Information: Integration of processes through the supply chain to share
valuable information, including demand signals, forecasts, inventory,
transportation, potential collaboration, etc.
Inventory Management: Quantity and location of inventory, including raw
materials, work-in-process (WIP) and finished goods.
Cash-Flow: Arranging the payment terms and methodologies for exchanging
funds across entities within the supply chain.
Supply chain execution means managing and coordinating the movement of
materials, information and funds across the supply chain. The flow is bidirectional.

Importance of Supply Chain Management in an Organization

It varies from industry to industry, where activities are involved in
procurement, logistic, manufacturing and distribution management of finished
goods. But in recent decades supply chain raise their importance as they are
recognize as a different department in an organization. The reason behind this
portion is that it takes aspect from marketing for distribution and manufacturing,
it takes aspect from finance for cost management and effective and efficiency
management, it takes aspect from marketing for customer response and it takes
aspect from finance for profitability.
It was internationally decided that it would be a component of basic
management and general management.
Supply chain basic function is that with the cost efficiency they get customers
responsiveness. If responsiveness would eliminate from the supply chain it will
not work. If we eradicate effectiveness and cost efficiency from supply chain it
will not work.

CHALLENGES THAT ORGANIZATIONS FACE

The main challenge facing supply chain organizations today is delivering
the right product at the right time and in the correct quantity, while maintaining
a minimal cost. Major changes in recent times have taught us that recently it is
increasingly difficult to meet up this challenge and, therefore, many factors and
variables must be considered.
Successful supply chain management requires cross-functional integration and
marketing must play a critical role. The challenge is to determine how to
successfully accomplish this integration. We present a framework for supply

chain management as well as questions for how it might be implemented and

questions for future research.

STAGES OF SUPPLY CHAIN MANAGEMENT:

Mr. Zaid bintaj, Manager ALC, Metro-Cash & Carry defined these steps which
Metro-Cash & Carry is carrying out
a.
b.
c.
d.

Planning
Buying with Procurement
Operation
Logistic

a) Planning

Planning in Metro includes:

Planning to buy seasonal products that exceed demands i.e. Roohafza
or Ready to cook products in Ramadan.
To be aware of time-to-time availability of products because metro is
not outsourcing warehousing facilities and storing its products in Metro
storage area which is not outsized for plenty of inventory.
Taking care of products that are being expired and perishable goods.
Planning of substitutes/alternatives of products, which have high
demand.
To try to get availability of products from local producers otherwise
they would approach international manufactures.

b) Buying with Procurement:

Metro carry out its buying by procurement in which effective buying is

involved. Procurement is the acquisition of goods, services or works from an
external source. It is favorable that the goods, services or works are appropriate
and that they are procured at the best possible cost to meet the needs of the
acquirer in terms of quality and quantity, time, and location. Metro-Cash & Carry
often define processes intended to promote fair and open competition for their
business while minimizing exposure to fraud and collusion.

c) Operation:
Supply chain takes aspects from all other fields of management i.e. its
take aspects from marketing of customer responsiveness and sales and some
finance of efficiency management and profitability. in short SCM is a combo of all
other fields of management if cost efficiency, effectiveness and responsiveness
is omitted from supply chain it wouldnt work In Metro operations are carried out
in certain steps: .
1. Transportation from either local producers or international.
2. Warehousing.
3. Packaging.
4. Product availability.
5. Quality maintenance.
6. Attractive prices.
7. Customer responsiveness through advertisements.

d) Logistic:
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Logistics is the management of the flow of goods between the point of

origin and the point of consumption in order to meet some requirements, of
customers or corporations. The resources managed in logistics can include
physical items, such as food, materials, animals, equipment and liquids, as well
as abstract items, such as time, information, particles, and energy. The logistics
of physical items usually involves the integration of information flow, material
handling, production, packaging, inventory, transportation, warehousing, and
often security. The complexity of logistics can be modeled, analyzed, visualized,
and optimized by dedicated simulation software. The minimization of the use of
resources is a common motivation in logistics for import and export.
Mr. Zaid Bintaj, manager ALC, is also a logistic manager whose work is to
manage products so that they efficiently and effectively; with the best price and
quality get to their consumer to build customer satisfaction. He handles
execution in the supply chain department in which he contemplate, in which
form products will be transported, delivered and displayed.

BUSINESS MODULE:
Every organization has a business module of its own, which tells about its
customers, its company code of conduct, its suppliers etc.
METRO is a large organization; therefore have its own business module,
which includes some of the following points:

Target customers: METRO gives its first priority to its professional

customers i.e. hotels/restaurants, offices, caterers, grocery/kiryana stores,
industries etc.

Codes of conduct: METRO makes sure that all its employees follow
company code of conduct for example, the complete hierarchy i.e. from
top to bottom are responsible for green management in and outside the
organization whether they are on a managerial position or not.

Target suppliers: METRO has its first priority on local producers and to
encourage exports in the country.

BUSINESS STRATAGIES:

METRO is a large organization and organizations make strategies to

achieve its goals. By applying its best practice of effective buying METRO is
having a great growth opportunity.
Mr. Zaid bintaj says that as they do buying from local producers through
procurement due to which effective buying takes place rather than going to
international producers; although, when they seek for alternative suppliers in
some situations, international suppliers are their next choice. Effective buying

places attractive prices on products that are usually higher in the market. Mr.
Zaid bintaj makes sure that by applying such strategies their goal can be
accomplished of Entertaining customers and selling its products with the
best quality and price.

CROSS DOCKING

Supply Chain department in METRO is a strategic senior level position

because super marts deal with the variety of supply chain activities. In the
supply chain department, workload is divided among six recruits; they use BBCD
(Bulk Break Cross Dock).
Cross docking is a practice in the logistics of unloading materials from an
incoming semi-trailer truck or railroad car and loading these materials directly
into outbound trucks, trailers, or rail cars, with little or no storage in between.
This may be done to change the type of conveyance, to sort material intended
for different destinations, or to combine material from different origins into
transport vehicles (or containers) with the same destination or similar
destinations.

BUDGET & COST CONTROL:

The practice of managing or reducing business expenses. Cost controls

starts by the businesses identifying what their costs are and evaluate whether
those costs are reasonable and affordable. Then, if necessary, they can look for
ways to cut costs through methods such as cutting back, moving to a less
expensive plan or changing service providers. The cost-control process seeks to
manage expenses ranging from phone, internet and utility bills to employee
payroll and outside professional services.
Without financial help business cannot survive in the market because at
the end businesses have only one purpose i.e. profit. To survive in the market
and to get growth, enough financial resources are needed. The budget of supply
chain department of METRO usually carries out operational activities.
Mr. Zaid strives to maintain cost efficiency in the organization so that
inflation does not occur. To be profitable, companies must not only earn
revenues, but also control costs. If costs are too high, profit margins will be too
low, making it difficult for a company to succeed against its competitors. It is also
a primary benefit as METRO provides less cost efficiency with effective
response to its customers.

PROCEDURE OF SCM IN METRO

Procedure of supply chain department in Metro-Cash & Carry includes the

following steps: Forecasting and quantification
Procurement planning and management
Warehousing and inventory management
Distribution
Consumption
Capacity building
Policy research/analysis.

CROSS-FUNCTIONAL ACTIVITIES
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A cross-functional team is a group of people with different functional

expertise working toward a common goal. It may include people from finance,
marketing, operations, and human resources departments. Typically, it includes
employees from all levels of an organization.
Cross-functional management emerged from the following two needs
A need for top management to clarify its quality, cost and delivery goals
and deploy them all employees at every level, and
A need to establish a system of close co-ordination among different
departments.
Cross-functional is incomplete without value chain

VALUE CHAIN MANAGEMENT

Value chain management is the process of managing the entire sequence
of integrated activities and information about product flow along the entire value
chain. Supply chain is a part of value chain management. Supply chains main
function is to modify the product towards consumer. Moreover, value chain main
purpose is to serve the customer.

OUT SOURCING
Metro outsources those things in which they have no expertise i.e.
warehousing and transportation. They store their products on above display
shelves.
In business, outsourcing involves the contracting out of a business process
to another party Outsourcing includes both foreign and domestic contracting
Companies primarily outsource to reduce certain costs - such as peripheral
or "non-core" business expenses, high taxes, high-energy costs, excessive
government regulation/mandates, and production and/or labor costs. The
incentive to outsource may be greater for U.S. companies due to unusually high
corporate taxes and mandated benefits, like social security, Medicare, and safety
protection.

RISK MANAGEMENT:
Supply chain risk management (SCRM) is defined as:
"The implementation of strategies to manage both everyday and exceptional
risks along the supply chain based on continuous risk assessment with the
objective of reducing vulnerability and ensuring continuity."

Supply Chain Risks in Organizations:

Organizations are experiencing rapid supply chain expansion with
decentralized supplier base. Although expanded supplier based in supply chain
have helped organizations in gaining major cost advantage and market share but
it has resulted in more unstable supply chain. Supply chains are vulnerable to
various types of disruptions caused by uncertain economic cycles, consumer
demands, and natural and man-made disasters. Consequence of an unstable

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supply chain has increased risks in conducting business operations and raises
concerns on continuity of manufacturing or service delivery operations. Supply
chain risk management needs to be adopted as best practice for supply chain
governance to minimize impact on financial strategy and profitability.

RISK TOLERANCE:
It is a degree of variability in investment returns that an individual is
willing to withstand. Risk tolerance is an important component in businesses. An
individual should have a realistic understanding of his or her ability and
willingness to stomach large swings in the value of his or her investments.
Risk tolerance in METRO vary, when we talk about quality standard its Risk
Tolerance is 0 in METRO but as Mr. Ziad said:
Business cannot be flexible when there is no risk.
As we all know that No risk = No business. The areas of risk are related to
customers changes in demand, monopoly, social responsibility, government
interference, amendment of new laws etc.

SOLE SOURCE & BACKUP SUPPLIERS:

A sole source purchase is one where there is only one vendor capable of
providing an item or service, and therefore it is not possible to obtain
competitive bids. A single source purchase is one where there are multiple
sources of supply, but for specific reasons the item or service must be purchased
from a specified vendor.
They are always looking for new suppliers to expand their product range
while maintaining the standards of quality and affordability their customers are
accustomed to.

INTREGRATED COLLABRATING ENVIRONMENT

An integrated collaboration environment (ICE) is an environment in which
a virtual team does their work. These fully featured environments combine the
best features of web-based conferencing and collaboration, desktop video
conferences, instant message into a single easy-to-use, intuitive environment.
Recent developments have allowed companies include streaming in real-time
and archived modes into their ICE.
METRO works with its suppliers within collaborating environment, which
also include electronic data inter-charges, which relates with its many suppliers
except their capabilities.

METHODS OF COMMUNICATION
Metro-Cash & Carry is working in a collaborating environment with their
suppliers to communicate. Communication environment includes Electronic
Data Interchange but only if they are competent.

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For example if a manger has 4G mobile and other supplier has 1G mobile
so how will they join forces with each other .
Nevertheless internationally, they are functioning with huge technologies
and they want to communicate with Pakistan Metro permit they face many
challenges because of lacking of technologies and use of technologies in
Pakistan. They trying to serve them as well as trying to fulfill the gap so that they
can get more awareness.

NATURE OF PURCHASING
The nature of purchasing within organization has changed significantly
over the past years. Purchasing was viewed as a clerical function performed to
buy the products and services required to carry out operations. This changed
purchasing today, in most organization, is viewed as a vital function that
influences significantly on organizational performance.

CONSUMER DEMAND PROBLEMS AND FEEDBACKS

Organizations face a number of problems when consumer demands are
not satisfied. For example, unavailability of products i.e. when a product I not
available according to consumer needs what problems do organizations faces.
Mr. Zaid Bintaj, also face such problems in his job, they also receive
complains and feedbacks from customers but organizations make solutions to
eliminate such problems. By means of alternative products, Metro eradicates
consumer demand problems. They make efforts to work with local producers
rather than international, because buying internationally is not an easy task to
accomplish; however, when there is monopoly or they lack procurement, they
continue their international chain.

LAW ABIDING INSTITUTION/GREEN MANAGEMENT:

METRO is a law-abiding institution and maintains international standards.

It focuses more on standards than on competition. By paying its taxes regularly,
it promotes law-abiding institutions worldwide; moreover, Metro does not sell any
kind of prohibited products and respects social culture.
Green logistics is a relatively new field of green supply chain
management among developing countries. The need to protect the environment
has led to the implementation of green supply chain management practices in
various industries across the globe. By implementing green logistics,
organizations are dealing with the issue of sustainability in the supply chain.
There is a need for integrating logistics into a sustainable development process.
One of the biggest challenges facing the supply chain at present is creating a
long-term sustainable society with the least possible negative environmental
impact.
METRO is therefore putting green logistic into practice on international
standards, many of its practices highlighted green management in this
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organization. Most commonly, known is GO GREEN, an international practice to

evaluate green logistics in our country.

Journey from

MAKRO to METRO

Reasons of decline since five years:

Complimentary items were given in Makro, which encourage and attract
customers to buy again.
Items shown in the brochures of promotions were available in the shelves
until the promotion period.
Due to good environment and easy access to home products more families
were attracted.
Genuine promotions were placed.
Developed a trend, which was not in the market.
At present in METRO:
No intensives were given to customers like complimentary items.
Genuine promotions are not placed and playing tactics to attract
customers.
To gain profit by believing in high profit low turnover rather than low profit
high turnover business formula; prices are much higher as compare to
their competitors.

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