Projects and measures
Procuring products directly from their place of origin
In order to be able to provide our customers with high-quality, safe products, we attach importance to adhering to social standards, which we monitor on a regular basis. But that is not all: direct contact with our suppliers also plays a key role in our procurement and supply chain management. This is because close relations with producers and growers allow us to directly influence the availability, condition, quality and sustainability of our products. We take two approaches in this regard. Firstly, we count on pooling procurement via our seven International Trading Offices (ITO). Secondly, we pay attention to purchase goods where they are produced or grown. This applies above all to fresh produce such as fruit, vegetables and meat.
International trading offices: pooling purchasing
METRO GROUP developed the International Trading Offices concept in 2009 with a view to sourcing products directly from their place of origin and making better use of market potential and synergies in the procurement process. We now pool purchasing for the METRO Cash & Carry national organisations via a total of seven of such trading offices, each with a specific area of expertise. For instance, our procurement centre in Valencia specialises in Mediterranean citrus fruits and vegetables, year-round produce from abroad such as pineapples and processed products like dried fruit.
The change from a procurement model with local intermediaries to direct sourcing allows us to further improve the quality, freshness and safety of the products and also to establish transparent long-term working relationships with our suppliers. Even at the initial stage of selecting suppliers, we set the bar high: agricultural producers must comply with the specifications of the International Featured Standard (IFS). Almost all suppliers – for the most part independent medium sized enterprises – are certified accordingly. In addition, we have developed a protocol to allow smaller local suppliers to be integrated into the network as well.
Our trading office employees are also in close contact with suppliers and regularly visit them at their premises. In this way, they are able to interact directly with our suppliers, establishing a rapport of trust and gaining insight into how they operate. In 2013, we purchased more than 200,000 tonnes of fruit and vegetables from growers in Spain, Italy, Morocco, Greece, Turkey and further afield via the trading office in Valencia alone. In the future, our aim is to further extend our partnership with suppliers through our International Trading Offices.
Back to the roots: regional purchasing
When designing and putting together product ranges, our sales lines make a point of including regional goods in a large number of categories. By procuring products such as fruit, vegetables and meat from local growers and manufacturers, we not only meet the growing demand for regional products among our customers but also help our suppliers to build up their operations, thereby contributing – together with our customers – to economic development in the respective regions. Thanks to our local procurement strategy, we also make an important contribution to sustainability: shortening transport routes pushes down the cost of goods while also reducing their carbon footprint.
An exemplary initiative launched within the framework of METRO Cash & Carry’s local procurement strategy is its “De-ale noastre” programme. Established by METRO Cash & Carry in 2012, this scheme helps farming companies in Romanian vegetable-growing regions to market native fruit and vegetables. Around 100 farmers from 33 regions distribute their produce through Romanian METRO Cash & Carry stores under the “De-ale noastre” brand name. The available product range was increased by around a third in 2014 and now consists of 45 types of regional fruit and vegetables.
As part of the programme, METRO Cash & Carry provides expert advice to local farmers on the whole production process – for instance on selecting types of fruit and vegetables, production and harvesting techniques, and marketing and distribution models. In this way, “De-ale noastre” benefits both the fruit and vegetable producers and the end customers. METRO Cash & Carry helps producers to practise sustainable agriculture, thereby contributing to the development of local communities. At the same time, our sales line enables customers to enjoy products from controlled origins which were grown using traditional farming methods. Fruit and vegetables sold under the “De-ale noastre” brand are regularly inspected from seed to shelf. In this way, METRO Cash & Carry Romania guarantees the traceability of products and, in turn, the high quality and safety of its food.
METRO Cash & Carry also takes similar approaches to boost regional procurement in other countries. In France, for example, our sales line signed the “100% regional” charter with the French vegetable producers’ association Fédération Nationale des Producteurs de Légumes de France back in 2010. This initiative promotes local vegetable farming and guarantees that METRO Cash & Carry wholesale stores are supplied with vegetables that were harvested that same morning or the night before by agricultural companies within a maximum radius of 50 kilometres. In the financial year 2013/14, METRO Cash & Carry France procured some 20,600 tonnes of vegetables from regional growers as part of this collaboration.
In Turkey, METRO Cash & Carry makes use of regional procurement and the strategic marketing of regional products to safeguard the existence of especially rare products. This is because the demand for regional products ensures that they will continue to be grown. These include garlic from the Black Sea district of Taşköprü, which is in danger of becoming extinct. This is marketed by METRO Cash & Carry under its own brand Horeca Select. The aromatic bulb also bears the geographic label – an official confirmation of the product’s origin and of its outstanding quality.
Regionality also plays a central role in Real’s product range strategy. Its hypermarkets already offer customers a wide range of products bearing the logo “Gutes aus der Heimat” (Prime local produce). These include fruit, vegetables and dairy products. Real’s “Meistermetzger” (Master butcher) concept also has a regional focus, with some 70% of the cold meats available at its hypermarkets consisting of regional products. Local produce already accounts for around a quarter of sales at Real’s fresh food counters, where the hypermarkets offer 222 articles from nearby producers, including own brands.