Global supply chains have developed to become a super network connecting the world with goods. Even more so since they have become increasingly digitized and intelligent with learning algorithms and artificial intelligence. It may seem old-fashioned that at METRO, even with the complexity, speed and opportunities of this modern retail world, we still put great emphasis on direct, personal and good relationships with our suppliers. Global Procurement to us means nothing less than finding the shortest connection between source and shelf. Why? Because we believe that these short ways are the best answer to questions of quality, responsibility, accountability, traceability and sustainability.
As an international wholesale and food specialist with operations in 36 countries across the world and many thousand food and non-food products on shelf in our stores and online we foster those short links with common sourcing. Our network of company-owned international trading offices (ITOs) is responsible for the direct procurement of the best products worldwide. Each location specializes in a specific category: the Valencia trading office (VTO) in Spain is responsible for fruits and vegetables, Rotterdam (RTO) in the Netherlands for fresh and frozen meat, and Concarneau (CTO) in France for fresh fish and seafood. There are additional sourcing offices in Hong Kong and Düsseldorf handling all other food categories; including wine and beverages.
All international trading offices bundle the demand volume of the various METRO countries based on their customers’ needs and go directly to the source. Up to 30% of the total supply volume is handled by the ITOs which altogether employ around 130 people and source an annual sales volume of more than 650 million Euros. The ITOs are always in close contact with the category managers of the METRO countries. Depending on the product and season, both sides decide on the strategic sourcing approach whether local, global, or both. For global procurement, the ITOs do business without middlemen. This empowers short supply chains, competitive prices, high product diversity, freshness, and availability of goods. Moreover, our direct procurement enables distinctive and sustainably designed assortments which are crucial to our main customer group, hoteliers, restaurateurs and caterers (HoReCa), who use unique quality products to develop their own culinary signature.
The way in which we approach relationships with our suppliers in common sourcing also offers us numerous starting points for a holistic approach to improvements along our supply chains with focus on our professional customers as well as in the area of sustainability. Let’s take a closer look at our oranges from Spain, for example. Sourcing oranges for professional customers means delivering the best orange for each individual demand – for example the small varieties that make the best juice. Basically, this means having the right producer for each type of orange. But at METRO, it is more than just having the right supplier; it is working with the right supplier. The VTO for example is often in direct, even daily contact with their producers. Ordering oranges is not a short-term business but requires planning ahead for up to 5 years. The close contact doesn’t only enable trustful partnerships; it also guarantees the freshness, quality, sustainability and full traceability of the products for METRO’s professional customers. The VTO furthermore requires GLOBALGAP certification from its suppliers, an internationally recognized safety and sustainability standard in agriculture, and conducts regular tests and inspections to ensure product quality and food safety.
But sustainability doesn’t stop at the sourcing of products. Each ITO is also staffed by logistics experts whose job it is to deliver the products quickly, professionally and on time. A recent test in Valencia proved that these transportation requirements can also be combined with sustainable methods. The oranges from the orchards around Seville, for example, are transported directly from Valencia to Rotterdam by a cool train from which they are then distributed to the METRO stores in the Netherlands. The result: 50% less CO2 than transport with conventional trucks.
Common Sourcing at METRO is based on product expertise and bringing differentiation to our customers. Our success relies on direct, constructive and often long-standing relationships with our suppliers. And it is an important linchpin to implement sustainability in a systematic way, test innovations and start pilots that can serve as a model for the sustainable path of the global group.
This post was written and contributed by:
Global Director Food Sourcing
As Global Director Food Sourcing at METRO AG, Sebastien Blanchard heads the food sourcing activities of the group. He leads a network of 5 International Trading & Sourcing Offices with expert teams dedicated to purchasing products and own brand ranges across the globe for METRO customers. Originally from France, Sebastien is passionate about food and rugby and has more than 20 years’ of international experience in foodservice, retail and wholesale procurement. At METRO, he works on implementing ethical sourcing strategies and shortening supply chains to collaborate with producers to ensure mutual growth, and bring products that help our professional customers differentiate their own businesses. He is a member of the Chartered Institute of Purchasing & Supply.