Case in point 10—Sustainable sourcing and procurement practices at Max Hypermarket (cont’d) Poultry
Max buyers maintain a long standing relationship with suppliers for fruit and vegetables, lamb, poultry and fish. This enables Max to ensure that rigorous standards for procuring and sourcing of these products are fulfilled.
Similar to the case of the fisherman, most of the lamb vendors did not have bank accounts and had to be educated on the issues of payments, opening bank accounts, accepting cheque payments, etc. The relationship with the poultry farmers is similar. Max buyers maintain a long standing relationship with poultry farmers and processing units. The farms and processing units have been checked prior to acceptance to ensure that they meet Max’s stringent quality and hygiene standards. Birds of a certain weight and size are sent to processing units where they are culled and processed according to Max standards. Spot checks and surprise visits are typically made by buyers to ensure that quality and quantity benchmarks that were set are being meticulously followed. Timing, packing, transportation and delivery processes have been streamlined and payment procedures have also been put into place.
Max needed to create and nurture direct relationships with fishermen. The fishermen’s experiences with other buyers had been traditionally unfavorable due to issues like non payment, pricing problems, etc.; over time, this lead to a feeling of mistrust on the part of fishermen. The fishermen were initially hesitant to supply to a large modern trade retailer like Max. Understanding this, Max gained their confidence and solidarity towards supplying high-quality fish.
Max initially faced issues with regard to the quality of fish. Suppliers were not present at the time when shipments were received at the Max store and problems would arise regarding quantity and quality of products. Another issue was with regard to payments since fishermen did not have bank accounts. Max expended the effort to teach fishermen how to open bank accounts so that the process of payments would become streamlined. In addition to payment mechanisms, grading and quality parameters have been clearly understood by suppliers and the rejection rate has come down to nil. The timing of deliveries, packing and transportation of fish to stores were also issues which have, over time, been addressed and streamlined, in alignment to Max’s specifications.
Max buyers have traveled the Indian coastline to locate vendors that can supply the kind of quality that the company demands for its customers. In fact, the main coast is not the catchment from where the fish is sourced; it comes from lesser known adjacent areas where the demand is less, so SPAR can command better prices. Eighty percent of fish is sourced directly from the landing centres and the fish farms. These relationships, which have been built up over a period of five years, are deep-seated and have involved buyers having lived with and fished with the fishermen on the trawlers, in order to experience firsthand and learn the process of fishing! Sourcing processes have also been enhanced by the classification of fish that is followed by Max. These classifications are -
Core (e.g., rohu, catla, seer)—Everyday buys for the customer
Alternative (e.g., barracuda, kingfish, shark)—Available in case the core catch is in short supply
Darling (eg., pearl spot, lady fish, anchovy, parrot fish)—Somewhat more exotic fish which add interest and colour to the display
Range (e.g., sole, halibut, salmon)
High range (e.g., lobster, jumbo prawns, hilsa)—High value catches
This helps in sourcing and pricing, merchandising, inventory management and promotional activities. Local vendors are given substantial orders based on the classification; this is more economical for fishermen and Max receives a better price which it passes to consumers.