Tuesday, February 7, 2012

Managing Inventory: Learning from Carrefour's Success in Indonesia

One day my wife asked me to buy some milk for my little daughter. Simple task, surely nothing can go wrong. Just go out to a store and buy one.

So I went to a supermarket just a few blocks away from our house only to find that the particular brand of milk I was searching for was out of stock. No big deal, I thought, just find another supermarket. And so I did, I went to a larger one, thinking that they must have the one that I’m looking for. Again, I was disappointed to find out that they were out of stock too.

It was starting to get a bit irritating. For my third and final attempt, I went to an even larger supermarket, or hypermarket these days, located a little further from home. Finally, I got what I was looking for. Mission accomplished.

The name of the hypermarket that had the stock of milk I needed to buy was Carrefour. It is the largest hypermarket chain in Indonesia. We have no Wal Mart, there is no Tesco, K-Mart, or whatever. The French company has been dominating the retail business in Indonesia for the past few years. As shown in the figures below, Carrefour has been expanding its business constantly year after year. Particularly in my country, Indonesia, the number of store network has been growing quite significantly (only second to China).

Store network (consolidated) (source: Carrefour Annual Report 2010)

So how does Carrefour maintain such a business growth as shown in the figures above? Simple, they had the milk that I needed while others didn’t. When people are in need of certain kinds of items, usually Carrefour can provide.

One of the keys to Carrefour’s success in maintaining their inventory of goods is having a well-organized logistics chain. According to Bayu A. Soedjarwo, Carrefour Indonesia’s Senior Manager of Logistics, they had an electronic system that monitored the number of inventory in a store and can automatically send purchase orders to suppliers if certain items run out of stock. In addition to that, he also explained that a supplier only needed to send their goods to a distribution center, where items from all other suppliers will be consolidated to specifically meet the needs (purchase orders) of certain stores.

According to Frederic Fontaine, Carrefour’s Technical Advisor for Supply Chain, this centralized supply chain model is mutually beneficial for Carrefour and their suppliers. For Carrefour, the main advantage is the improvement of stock availability in their stores. This also gives the suppliers an advantage because it eliminates the lost of sales caused by items that are out of stock. Another benefit for the suppliers is the reduction in shipment expenses because they only need to ship their goods to a distribution center instead of going to every store that ordered their goods.

Carrefour's Supply Chain (via carrefour.com)

  1. http://swa.co.id/updates/muluskan-distribusi-jutaan-barang
  2. http://www.carrefour.com/docroot/groupe/C4com/Pieces_jointes/RA/2011/Carrefour_Rapport_Financier_2010_72DPI_RVB_GB.pdf
  3. http://www.carrefour.com/docroot/groupe/C4com/Commerce%20responsable/Notre%20engagement%20pour%20l'environnement/Réduire%20nos%20impact%20logistique/infography%20CO2.pdf


  1. in grocery store, proper product, good stock managing is the very important thing. I think one made them successful is the have a good system. for inventory system, POS Sotware not to mention of being advance Touch Screen POS.

    They supply needs of the customer in most items available. it is the cause of having proper inventory software and control

  2. Great blog! I really appreciate your work you have done in this field of inventory management. This info graphic is very beneficial for Carrefour and their suppliers. Restaurant Management Software helps you automatically send purchase orders to suppliers.

  3. Thanks for sharing a very useful article


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