Global Supply Chain Management by Drake Matt

Author:Drake, Matt [Drake, Matt]
Language: eng
Format: mobi, epub
Tags: Nonfiction
ISBN: 9781606492772
Publisher: Business Expert Press
Published: 2011-12-20T00:00:00+00:00

Example 3.2. Trust-Based Collaboration in Vietnam

Much of the press coverage of advances in supply chain management understandably focuses on large, high-profile companies boasting millions or perhaps billions of dollars in savings as a result of their supply chain initiatives; it is important to remember, however, that organizations of all sizes can benefit from managing the supply chain effectively. One such example is Metro Cash & Carry Vietnam, a German-owned grocery wholesaler that focuses on supplying the hotel, restaurant, and catering industries.

Metro has been successful in the market primarily by building long-term relationships with its suppliers and customers, allowing the firm to charge competitive prices for high-quality merchandise and customer service. Metro builds trust with its suppliers over time by offering consistent suppliers faster payment of invoices, which helps the suppliers’ cash flows. While there are many potential suppliers of local produce in Vietnam, few of them are able to provide quality products throughout the year on a consistent basis. Metro’s buyers talk with and visit the suppliers regularly to increase the level of trust between the two parties. Metro also commits to long-term supply contracts with its best suppliers, thereby reducing their susceptibility to market risk. Over time, this has enabled Metro to develop a strong base of reliable suppliers to ensure that it will be able to fulfill its customers’ orders in a timely manner.

Metro also collaborates with its major customers, including the New World Hotel in Ho Chi Minh City. Metro entered into an alliance with the five-star hotel in 2002 in which the hotel agreed to purchase practically everything that Metro was able to supply. The hotel agreed to a regular order frequency, which has allowed Metro to optimize its transportation operations. Metro provides a dedicated account manager for the hotel and sends a staff member to accompany each shipment to the hotel and assess its quality on site. The relationship between Metro and the New World Hotel is founded on information sharing and personal relationships in a way similar to Metro’s relationship with its local produce suppliers. This mutual trust has yielded financial rewards and reduced supply chain variability for each party involved— the fundamental purpose of supply chain management itself.

Source: Cadilhon and Fearne (2005).

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