|
Page
4 of 5
How
do you handle deliveries within a four-week
time frame? They realised this required
a second warehouse to receive the stock.
The warehouse was located 30 kilometres
away, and every night a fleet of 30 trucks
would deliver goods from the stock warehouse
to the assembly platform to feed the assembly
line for the next day.
Labelling
the products in the right language could
not be done by the factories. They established
a team of 10 to prepare the import labels
for 13 to 15 different languages. They grouped
the languages of neighbouring countries
together so that one label could contain
a number of different languages.
The
third operation came in December 2003 with
45 million pieces, yet none of the operations
needed upfront investment. To finance the
projects each retail country was offered
a price for the goods.
The
price included the costs from the factory,
labour, display units, warehousing to shipment.
It was necessary to buy the goods at between
10 and 60 cents apiece or they would suffer
a loss. Ten cents was added to each item
to cover the costs, an adequate amount given
the large quantity of goods.
In
the June promotion alone, Carrefour earned
about EUR30 million (US$40.79 million) in
sales across 30 stores worldwide, and EUR100
million for all three.
Two
years later and the Carrefour concept had
collapsed. Although the French retailer
continues to source from China, it has since
abandoned this method of supply chain management.
And according to Mr Martin, it has been
to their detriment.
"They
made a wrong move because they killed their
own tool by stupidity."
The
reason behind the company's nonchalant attitude
towards lower operating costs, he said,
was because the company's turnover each
year was so great that management was not
looking to monitor expenses more closely.
On
a brighter note, the concept behind Carrefour's
China sourcing success still exists. Other
big retailers jumped on the bandwagon after
Carrefour's success, but many failed to
implement the concept and gave up trying.
One
of the main stumbling blocks was the lowering
the operational expense. One of the first
and perhaps greatest hurdles in achieving
this was getting the factory to lower its
prices. A supplier can't handle other factories'
goods; hence the logistics firm acts as
a go-between to provide value-added services.
Basing
the operation within a free trade zone created
problems in itself because of the many restrictions.
For example, whatever entered must be shipped
out, but what happens when the goods had
defects or the order was cancelled?
With
a non-Customs bonded warehouse, there is
greater flexibility to manage the inventory
with the vendors and the deliveries, it
is not necessary to issue an invoice for
Customs at every delivery.
Page 1 2
3 4 5
[Next]
|
