The consequences of the corona crisis are clearly visible in retail: hygiene articles are out of stock, shelves with durable foods are empty. And in wholesale? This is how METRO is meeting the challenges posed by changing demand and supply.
Our everyday life was rapidly turned upside down by Covid-19. As well as for global procurement and supply chains, these changes in life – largely ordered by federal authorities – meant process changes, employees suddenly working from home, and demands that have to be reacted on differently. This applied to METRO as well. The good news: “The support from the global food sourcing teams towards the countries’ offer teams and suppliers has never been so intense – with some significant results”, says Sébastien Blanchard, Global Director Food Sourcing at METRO AG.
The support from the global food sourcing teams towards the countries’ offer teams and suppliers has never been so intense.
Sébastien Blanchard, Global Director Food Sourcing at METRO AG
All 3 International Trading Offices in Rotterdam, Concarneau and Valencia have their staff working remotely from home, just like the Sourcing and Supply Chain teams in Dusseldorf. Support for the local operations is expressed, for example, in “either supplying products with huge uplift in demand or helping countries to lower their stocks”, says Blanchard.
Anticipating the volatile behavior of customers’ demands, a closer collaboration between the Sourcing and Supply Chain teams at centre level has been established since the very beginning of the crisis. METRO’s aim was “to provide a fast-reacting response towards downstream and upstream flow, including supplier follow-up and finding alternative sources, if necessary”, explains Marco Celenta, Global Supply Chain Director at METRO AG. This applies in particular to the supply chain for common sourcing range, including dry and edible groceries.
High speed, agility and more efficient processes are needed now – the recently implemented new end-to-end set up at Global Procurement Level cleared the way for this just in time. “Furthermore, as we have implemented central ordering governance and digital advanced solutions based on our ‘Integrated Planning’ system in many countries, we benefit from this at country level and provide high transparency and reactivity”, says Celenta. Besides, the 3 decentralised trading offices mentioned above, along with the team in Hong Kong, have a distinguishing feature: they buy directly from producers, suppliers and fishermen, with end-to-end responsibility in commercial relationships as well as with supply chain and logistics, quality assurance and financing aspects.
But despite all speed and agility there are difficulties that need to be overcome. “We do see some scarcity in raw materials or lack of availabilty versus demand, bringing some strong price increases”, says Global Director Food Sourcing Sébastien Blanchard. The main reason: customers panic buying on certain food and near food articles. “Especially some products like pasta, rice, flour, canned goods, frozen fruit and vegetables and toilet paper.” Therefore, it was unavoidable that unfortunately customers also feel some impact on prices – for instance with fruits due to the lack of labourers working in the fields. Blanchard: “We are doing our utmost to ensure price stability.”
The extent to which possible price increases ultimately have to be passed on to customers also depends on how long the Covid-19 crisis lasts, and to what extent it affects the entire value chain. “In general, the traditional flow of goods and routes are still active at international level”, Celenta reassures. Restrictions at borders are not affecting transit of goods at the moment – although it generates delays due to additional checks on drivers. Regarding particularly affected risk areas, the value chain dependency on some regional hubs has been reduced by switching to multiple sourcing points in different regions. “We operate in long running and solid relations with our logistic suppliers and third parties”, says Celenta. “That gives us a certain stability, while of course applying the principle of fairness because of the given circumstances.”
Alongside all economic efforts, there is one main concern: the health and well-being of the employees. “We pay high attention to safety preventive measures needed to protect associates and colleagues”, says Celenta. “Many employees need to look after their children and loved ones, while at the same time being extremely busy behind the scenes supporting our front-line colleagues in the stores”, Sébastien Blanchard adds. In his opinion, there’s one crucial factor now: “Maintaining close contact, albeit remotely, is key.” A piece of advice that applies to managing goods, of course, as well as to keeping up the team spirit.