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Carrefour's Supply Chain Logistics and Distribution System

Technical Report · May 2021

DOI: 10.13140/RG.2.2.25289.72803

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Carrefour's Supply Chain Logistics and Distribution Systems

Dr. Muhammad Usman, Associate Professor, prepared this case from published sources
and it’s intended to be used as basis for classroom discussion rather than to illustrate
either effective or ineffective handling of a management situation.
Introduction

Carrefour is one of the largest retailing stores in the United Arab Emirates, with US $ 30
million annual sales in 2019. Carrefour is known as an industry-leading store for its supply
chain management procedures. These procedures act as a competitive advantage in the
retail industry, which has helped Carrefour attain leadership by improving its operational
effectiveness on customer requirements. Carrefour website presents logistics and
distribution as the critical factor of its operative procedures, which allows delivering
billions of products to the customers every day 1. Carrefour opened its first hypermarket in
Deira City, UAE, in 1995. It operates different hypermarket and supermarket stores to meet
its growing customer’s needs. The main focus is on the quality of products and value for
money. Currently, it has offered an unrivaled option of more than 120,000 products,
including food, non-food, and household goods.

Supply Chain Logistics

Supply chain and logistics are the vital factors that contribute to any organization's
long-term viability. Carrefour supply chain logistics consists of electronic data exchange
(EDE) that provides plenty of benefits. It provides complete control of the workflow
throughout the supply chain network. Carrefour's automatic distribution centers consist of
truck fleets that function 24/7. In the United Arab Emirates, Carrefour has 100 regional
distribution centers for domestic flow. When launching in a new geographical area,
Carrefour first investigates if the site will have enough storage capacity to uphold a
distribution center. Each distribution center maintains almost 65-110 stores in an
approximately 200-mile area. Stores are constructed near the distribution enter to steep the
site and network of the distribution center, known as re-enhancement. The outcome is a
knock-on effect; vehicles do not have to move as far to merchandize to commence
deliveries, close ranges decrease shipment costs and "lead time," and less lead time helps
maintain less safety stock2.

____________________________________
1.https://www.esri.com/content/dam/esrisites/en-us/media/fliers/carrefour-group.pdf

2. https://www.foodlogistics.com/sustainability/company/21132396/carrefour
If there are any insufficiencies, re-supply is provided more swiftly because stores obtain
deliveries from distribution daily2. Overall, Carrefour has globally 12052 stores
worldwide, focusing on providing quick and efficient logistics services. Carrefour's
logistics significant attribute is its quick and receptive transportation system that lowers
the human errors up to 80% and accelerates the documents processing up to 75%. Two
thousand trucks owned by the company maintained the distribution centers connected to
the EDE. These allocated trucks granted the company to deliver products from the
distribution units to the departmental stores in 1-2 days and re-store the store's shelves two
times a week. The trucks are an apparent connection between the distribution units and
stores.
Carrefour recruits experienced drivers who possess extensive vehicle driving experience
of more than 250,000 miles having accident-free and zero traffic rules violations 3. Trucks
drivers pick the consignment-loaded trucks from the distribution units to the retail stores
maintained by each distribution unit. These retail stores are contemplated as customers by
the distribution units. The drivers on duty must inform their working hours to their
supervisor daily. The supervisor plans all the consignments based on timings for driving
and calculating the time for carrying the products from the distribution units to retail units.
The supervisor has to brief the driver about the items he has to deliver on the driver's arrival
at the distribution unit or return from the retail store to the distribution unit. The driver is
counted upon to take a freighted truck from the distribution unit to the retail store and
return with an evacuated truck. He has to send off a freighted truck at a store and stay there
overnight. A driver has to bring the truck to the front of the store only at its planned
unloading time, irrespective of its arrival time4. The drivers dispatch the truck in the
daytime and unload them during the evening. There is a break of 3 hours between
dispatching each loaded truck.

____________________________________
3.https://www.icmrindia.org/casestudies/catalogue/Operations/CarrefourManaging%20the%20Global%20
Supply%20Chain.htm
4. http://www.carrefour.net/en/articles.html?a=22295
For example, if a store collects three loaded trucks, the first will be unloaded at 1 AM, the
second at 4 AM, and the third at 7 AM. The drivers are responsible for guarding the vehicle
and waiting for the shift manager to approve the unloading of trucks. Carrefour collects
more loaded vehicles than their storage capacity due to their significant business volume5.
In several stages, the digital innovation improves the processing of the trucks and EDI that
is not dependent on the drivers, warehouse employees, managers, or freight forwarders.
There is a continuous exchange of information to ensure instant information retrieval6.

Efficient and Receptive Management

Carrefour's quick, receptive transport functions are a vital part of the organization's
flourishing logistics system, and utmost care is taken in the recruitment, on-the-job
training, administering, and allocating of driver's plans and job duties. From the start of
merchandising business, the CEO of Carrefour understood the significance of recruiting
expert employees and enhancing loyalty in the employees and customers. Persistent
training sessions about the necessary code of conduct and job duties are essential steps to
support staff in prioritizing patients. Nonetheless, these refinements cannot be attained
instantly and must be managed continuously while brilliant leadership tries to build this
conduct in the staff's code of actions7. The stores ensure that optimization plans are
devised, and performance is measured periodically. The opportunities are identified for
improvement of the overall system8. Scorecards are used to increase supply chain
efficiency and achieve operations excellence. Every scorecard has special indicators to
benchmark with the best practices. The system is further supported by an effective response
system for the customers. A quick response method is used that focuses on the distribution,
promotion, and sales of goods. Forecasting is done to ensure the best estimation of orders
and replenishment time of stocks. The collaborative forecasting of sales from supplier and
seller provides the competencies to establish a realistic replenishment strategy.

____________________________________
5. https://logisticsmgepsupv.wordpress.com/2015/06/13/carrefour/
6. http://www.carrefour.net/en/articles.html?a=22295

7. https://tel.archives-ouvertes.fr/tel-01208317/document

8. https://www.logisticsmiddleeast.com/tags/carrefour
Carrefour gets outcomes unequaled in the logistics platform by efficiently handling every
facet of its transport activities and fairly handling the drivers. Rule and regulations are
essential for maintaining consistency, which helps prepare and execute the functions
correctly. To continue its distribution procedure more effectively, Carrefour also used the
technique of logistics as "cross-docking." Products are collected from the manufacturing
unit or a supplier and then directly delivered to the customers in this system. The system
decreased the management and storage capacity of finished products, effectively
eradicating the store’s and distribution unit’s roles. Following are the five types of "cross-
docking10."

1.Opportunistic Cross-docking: In this technique of "cross-docking," accurate details

about where the products should be delivered and from where they should be acquired, and
the precise quantity which will be shipped as required. This cross-docking technique has
permitted Carrefour to deliver the products directly to the retail customers, not stocking
them in storehouses. "Opportunistic cross-docking” could also be adopted when the
storehouse management software set by the retailer, that the particular finished good was
ready to ship immediately11.

2. Flow-through Cross-docking: In this cross-docking technique, there was a total

outflow and inflow of the distribution units' products. This technique was appropriate for
the delicate products which had a short expiry date or the products with the difficulty of
storing them in storehouses. This system was associated with hypermarkets and other
departmental stores, particularly for delicate products 9.

____________________________________
9. https://ivypanda.com/essays/carrefour-uae-marketing-strategy
10. http://www.romanask.org/eng/about/sub_8/8.htm
11.https://www.carrefouruae.com/mafuae/en/cengage-learning-services-principles-of-supply-chain-
management-a-balanced-approach/p/9781111532642
3. Distributor Cross-docking: In this cross-docking technique, the producer has shipped
the products to the retailer. No mediators have been incorporated in this procedure. It has
permitted the retailer to reserve a significant part of expenses in the embodiment of storage.
As the merchandizer should not help the distribution unit store different products, he has
assisted it in extricating storehouse expenses. The lead time of the shipment of products
from the producer to the clients was also substantially minimized. However, this technique
had some drawbacks too. Costs of transport system both for the producer and the
merchandizer escalated when required to transport the products to various destinations.
Furthermore, the transport system should be swift. Contrarily, the objective of cross-
docking has vanished. The transport system should be approachable and take
accountability for the product’s postponements. The merchandizer was endangered. He has
missed the benefit of partaking in the perils with the producer. This cross-docking
technique was appropriate for the merchandizer who attained an extensive distribution
network and could be utilized when products had to be shipped in a limited time12.

4. Manufacturing Cross-docking: In the Cross-docking technique, these amenities

supplied the factories and proceeded as transitory and small storehouses. A production
company needed some components and equipment for producing a specific product, and
the supplier shipped it in small realms within a limited time when required; this supported
reducing transportation and storehouses costs 13.

5. Pre-Allocated Cross Docking: It is almost the same as cross-docking; apart from that,
in this technique of cross-docking, the products are wrapped and marked by the producer,
and it is ready for delivery to the distribution unit from where it can be shipped to the store.
The products can be sent directly to the retail store by the distribution unit without opening
and re-packing them. The retail store can then ship the products to the consumer without
packing them again. Products collected by the distribution unit or retail store are delivered
directly into the shipment vehicle to be sent to the customer without changing its
packaging.
____________________________________
12.http://www.carrefour.net/en/articles.html?t=69
13.https://www.globenewswire.com/news-release/2019/07/09/1880190/0/en/Carrefour-France-Makes-
Investments-to-Optimize-Its-Supply-Chain-Operations.html
14.https://www.icmrindia.org/casestudies/catalogue/Operations/Carrefour-
Managing%20the%20Global%20Supply%20Chain.htm
This technique needs a close collaboration of the producers, storehouse workforce, and
retail store employees15. Products can be effortlessly and rapidly shipped only when exact
detail is accessible. In cross-docking, the demands obtained for various products from a
retail store were transformed into acquisition and purchase orders 16. These orders are then
handed over to the producers, who declare their capability to supply products within the
specified time, the products are dispatched to the staging area. These products are then
packed according to the received orders from various retail stores and delivered to the
consumers17. To attain most from the cross-docking, Carrefour had to adapt essential
modifications in its managerial approach. Conventionally, retailing, price and promotional
strategy decisions have been concentrated. The system of cross-docking has altered this
procedure. It relocated the concentration from the supply chain to the demand chain.
Instead of the merchandizer forcing the products into the system, consumers can pluck the
products when required18.

Inventory Management
Carrefour UAE understands the significance of the inventory management for their
business. They utilize an effective inventory management system with an updated amount
of the goods as a leading hypermarket. The system includes both periodic inventory and
perpetual inventory. The periodic method is utilized to update the inventory data bi-
annually or yearly for efficient time management. The perpetual method is the main
method used for the inventory based on continuous monitoring of items sold, received,
moved, scrapped, or added to the inventory. A push and pull strategy are used to manage
the effectively inventory and distribution system.
Conclusion
Carrefour supply chain processes rely on the effective planning and strategy for timely
availability of the products for distribution centers, suppliers, stores, and customers with
reduced costs and real-time information sharing. Overall, it is worth noting that it is an
effective supply chain and logistics system that is the backbone for success.
____________________________________
15.https://tel.archives-ouvertes.fr/tel-01208317/document
16. https://pdfs.semanticscholar.org/53fd/28043c089118225c0ed3dd8c1306a1482a04.pdf
17.https://internetretailing.net/operations-and-logistics/operations-and-logistics/case-studies-auchan-and-
carrefour-use-blockchain-to-boost-supply-chain-visibility-18775
18.https://www.foodlogistics.com/sustainability/company/21132396/carrefour
TEACHING OBJECTIVES
This case is intended to expose participants to the nature of Carrefour logistics in the UAE.
Through class discussion, student should be able to:
• Explain the core competencies of Carrefour's support its logistics and distribution
system.
• Evaluate the possible challenges faced by Carrefour's regarding distribution
system and explore strategies Carrefour uses to handle challenges.
• Evaluate Carrefour's recruitment procedures of staff.
• Propose strategies to balance its distribution system with the business continuity.

IMMEDIATE ISSUES
• Implement strategies to support the logistics and distribution system.
• Hire skilled drivers for the completion of distribution procedures.
• Plan the business continuity following the outcomes of logistics and distribution
systems.
MAJOR QUESTIONS FOR DISCUSSIONS
Students can be asked to answer the following assessment questions during the class
discussions:
1. Discuss the significance of logistics and distribution system management in
Carrefour?
2. Evaluate drivers' role in the smooth flow of logistics and distribution systems?
3. Recommend the possible strategies Carrefour can adopt to improve its logistics
department to enhance productivity in the retailing store?
 Exhibit I

Carrefour Worldwide Stores

Source: https://www.carrefour.com
 Exhibit II
Principles for the flow of the information framework.

Source: https://www.carrefour.com
 Exhibit III

Supplier Relationship Model

Source: https://www.carrefour.com
 Exhibit IV

Cost of Logistics

Source: CarrefourGroup
 Exhibit V

Logistics Operations and Supply Chain

Source: Author

Exhibit VI
Push and Pull Strategy
 Suggested Reading and References:

1. Ali, O., & Hingst, R. (2018). Improving the retailer industry performance through
RFID technology: a case study of Wal-Mart and Metro Group. In Cases on Quality
Initiatives for Organizational Longevity (pp. 196-220). IGI Global.
2. Amiman, R. J., Lapian, S. J., & Tumewu, F. J. (2018). Evaluating store attributes of
transmart carrefour manado as new store using importance and performance
analysis. Jurnal EMBA: Jurnal Riset Ekonomi, Manajemen, Bisnis dan
Akuntansi, 6(1).
3. Beck, M. (2019). Cost-Benefit Analysis of the Integration of Electric Semi Trucks to
the Walmart Distribution Network within the United States (Doctoral dissertation).
4. Burek, J., & Nutter, D. (2018). Life cycle assessment of grocery, perishable, and
general merchandise multi-facility distribution center networks. Energy and
Buildings, 174, 388-401.
5. Haag, L., & Sandberg, E. (2020). Exploring key logistics characteristics supporting
embeddedness in retailers' geographical expansion. The International Review of
Retail, Distribution and Consumer Research, 30(1), 1-26.
6. Jawad, S. (2017). A literature analysis of Walmart's supply chain excellence in term
of integration, distribution and operations.
7. Nguyen, T. T. H. (2017). Wal-Mart's successfully integrated supply chain and the
necessity of establishing the Triple-A supply chain in the 21st century. Journal of
Economics & Management, 29, 102-117.
8. Ren, S., Chan, H. L., & Siqin, T. (2020). Demand forecasting in retail operations for
fashionable products: methods, practices, and real case study. Annals of Operations
Research, 291(1), 761-777.
9. Ștefan, M. C., & Andreiana, V. A. (2017). Comparative Analysis of the Distribution
of Goods in Two Outlets: Carrefour and Auchan Ploiesti. Valahian Journal of
Economic Studies, 8(1), 97-106.
10. Yu, Y., Yu, C., Xu, G., Zhong, R. Y., & Huang, G. Q. (2020). An operation
synchronization model for distribution center in E-commerce logistics
service. Advanced Engineering Informatics, 43, 101014.

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