How Metro Cash & Carry is transforming its operational model to deliver more for customers...
“The customer is not the king anymore,” says Patrick Dittli, METRO Cash & Carry’s Global Director of Supply Chain Management. “They have evolved into the master of the universe, standing in the middle of a multi-dimensional fulfilment matrix. The customer can choose where they want to get the product from; there’s full transparency over the price and full transparency about availability.”
About two years ago, METRO Cash & Carry made the decision to introduce a new operating model. Deploying a new operating board, backed up by strategic focus on digital and technological innovation and , while implementing a proactive supply chain strategy, the company is unlocking value for the next generation of customers. We drill down to the core of this transformation and speak to one of the men making it all happen.
“The way the entire value chain has been built in the past is not configured anymore to meet the needs of the new environment,” Dittli says. “There are profound impacts on supply and value chains because we are sitting on physical assets built on the traditional way of fulfilling a traditional customer need up to the supplier.”
METRO Cash & Carry is a sales division of the METRO GROUP Wholesale and Food Specialist Company (W&FS Co.). Headquartered in Düsseldorf, Germany, METRO GROUP W&FS Co. is a leading international player in wholesale and foodservice distribution. With its sales lines METRO Cash & Carry and Real as well as its other associated companies, METRO GROUP W&FS Co. operates in 35 countries and employs more than 150,000 people around the world. In 2015/16, METRO GROUP W&FS Co. achieved sales of around €37 billion. The company provides custom solutions to meet the regional and international needs of its wholesale and retail customers.
Through its Metro and Makro, METRO Cash & Carry captures the global food and non-food wholesale market, offering products and services to customers ranging from small independent bakeries, to elite hotels and restaurants.
Eager to deepen its value offering to a rapidly evolving, segmented customer base, METRO Cash & Carry is transforming its operational model. One key step on this ongoing journey has been increasing autonomy amongst individual countries. Dittli explains: “The value is created in the countries. The new operating model therefore gives more autonomy but also responsibility to the countries to realize these values. The mandate of the head office therefore changed and consists of supporting the countries in delivering these values.
“They can define the strategy and are responsible and accountable to deliver that. Their local strategic focuses are the base and is the local strategy document that defines how we want to harvest and leverage the priories and values of the customers.”
The classical wholesale model continues to be METRO Cash & Carry’s backbone, he says, but the company is building up constantly its food delivery and services arm, “one of the biggest common denominators coming forward”.
METRO Cash & Carry is also re-examining how its distribution network is structured, particularly on the fulfilment side. By building dedicated fulfilment centres, the company is further improving its response times to customers through increased proximity. Alongside expanding its own assets, the company has recently acquired a couple of competent and leading food service distribution (FSD) companies, including one key food supplier of upmarket restaurants in the Far East.
Technology is also playing a critical role and data itself is being fully realised as a commodity. “Money used to be the fuel,” Dittli explains. “This has been replaced by a new currency: data. Technology managed in an agile way has become the key decisive enabler. Data has become the decisive element to make money or not, and technology is the key fundamental backbone to make that happen.”
Even before METRO Cash & Carry’s transformation, the company was well known for doing business sustainably, both when it comes to the environment and other businesses. Closer collaboration with suppliers has been central to this, with the aim of promoting a virtuous cycle. The company’s dedication has paid off, with Coca Cola or Procter & Gamble recognising METRO Cash & Carry’s efforts with a much-coveted Supplier Excellence Award for Excellence in Collaboration. “The suppliers realise that how we respond to these needs is about to change. This is a win-win situation from us – we cannot do it on our own and need to get them on board,” Dittli adds.
The attention METRO Cash & Carry pays to environmental protection has positioned the company as a global leader in its industry. Notable aspects of its comprehensive CSR strategy include strong safeguards against slavery in the supply chain, FSC-certified packaging, and the use of sustainably farmed food. The use of a traceability app that enables customers to drill down to the fine details of food purchased in store, is one example among others
It is little wonder that the METRO GROUP has been recognised, for the second year running, by the Dow Jones Sustainability Index as an "industry group leader" in the Food & Staples Retailing category. “Once you buy a fresh fish in METRO stores in Germany, they have a bar code attached,” Dittli explains. “You can take your smartphone and scan that barcode to know where this fish comes from – you download the number and you can know the name of that boat that has caught the fish and where it was caught.”
Having demonstrated its ability to respond to changes in the market proactively, METRO Cash & Carry has laid the foundation for fundamental change that will bring benefits for customers, partners, and the business itself. Backed up by its commitments to serve customers’ needs and protect the environment, the company is sure to lead its industry for the foreseeable future.