Makro has embarked on a trade partner integration initiative that the high volume, low margin wholesaler claims will improve efficiencies across its supply chain, reduce the cost and complexity of doing business with its suppliers, and leverage its investment in technology.
Makro is part of the Massmart group, a R20 billion portfolio of retail and wholesale chains each focusing on high volume, low margin, low cost distribution of mainly branded consumer goods for cash, in eight countries in southern Africa.
"The hype around e-business is now well and truly over, and we plan to take advantage of a new wave in which collaborative initiatives are being taken seriously," says Dimitri Androliakos, SAP project manager at Makro.
"Our goal is to give our suppliers the best deal possible, while ensuring that we continue to offer our customers value for money."
Androliakos says collaboration efforts in general across the industry have been slow to take off because of the lack of maturity in trading relationships, the readiness of business, and the lack of systems capabilities.
"Key to the kind of alliances we are setting up is investment in a core transaction processing system that can be leveraged for the purposes of setting up trade partner relationships. We chose SAP R/3 Enterprise as the technology engine for our collaborative initiatives because it is able to process great transaction volumes, and manage the business processes of a large retail organisation."
Trade partner integration incorporates strategies, processes and systems that enable trading partners to work together to generate additional revenue and allow the consumer to benefit in the process.
It targets typical inefficiencies in the supply chain, such as poor forecasting, long lead times, and lack of stock visibility. "Industry leaders are tackling these problems by implementing solutions that enable data alignment, information exchange and collaboration and coordination," says Androliakos. "Simply put, those who do not look at their businesses and the processes involved will find that their organisational processes are rarely aligned with their business objectives."
Collaboration will enable Makro to align supply with demand, and to meet its customers' and partners' expectations at every point in the value chain by optimising internal workflow and external trading partnerships.
At a strategic level, Makro is establishing collaborative relationships with all its major partners, and these alliances are being driven by a multifunctional team at the highest level in the organisation. Androliakos says some of the key considerations when selecting suppliers to collaborate with include their size, and their potential within the Makro business.
"Other important points to consider include the state of their key business metrics, and the maturity of their business processes. Commitment from management is critical. Finally, IT readiness and a technology platform that supports collaboration will determine the level of success of an initiative of this nature."
Makro chose SAP as its platform because the company's past experience with the technology showed that it was open, scalable and flexible enough to accommodate collaboration between technologically sophisticated trading partners as well as those with more rudimentary systems. SAP also proved to be generic enough to be adapted to the needs of Makro's partners, as well as sufficiently customisable to accommodate their specific requirements.
"Makro's solution will give the company and its trading partners visibility, workflow and complete integration, enabling them to interact as one and in real-time," says Brandon Shaban, retail solution manager at SAP Africa. "This, in turn, means higher levels of service for customers, as well as reduced operating costs."
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