Massmart - Corporate Profile - Group Channel and Services

By: Massmart  11-11-2011

The Channel function provides a secure and structured place for our Divisions to share information and collaborate in a way that we believe will materially benefit the Group. This is done primarily by organising forums, in particular areas of competence and interest, which bring together the best and most senior skills in the Group in each functional area. These forums are chaired by members of the Group Executive Committee and consist of both trading and functional forums.

Each forum is tasked with performing four key functions.

The first, and most important, is identifying common opportunities across Divisions where the capability and resources of the Group can be leveraged to increase profits or reduce costs across some or all Divisions in a way that could not be achieved by any Division acting independently. This can take the form, for example, of sharing private label products, collaborating on product sourcing, supplier negotiations to reduce the cost per unit from shared vendors, or building shared supplier relationships.

Secondly, forums are also used to reach agreement on common standards that are important for Divisions to adhere to. In addition to this, forums assign and monitor Group representation on external standards and industry bodies and engage government in legislative processes relevant to our industry.

Thirdly, forums perform a peer review function to improve performance. Massmart Divisions assess each other for adherence to agreed Group standards and operating norms, and ensure appropriate measures are adopted to mitigate against risks material to the Group.

Lastly, forums function as a place to share internal and externally sourced learning. Divisional level data is gathered, analysed and benchmarked at Group level, then presented and debated at the various forums, and experiences across Divisions that will materially advantage the Group are shared. Processes piloted in one Division can be rolled out in another. External learning takes the form of presentations from conferences, visiting other local and international retail sites, gathering market share data meaningful in tracking Divisional category performance against competitors and monitoring competitor activity through supplier and market intelligence. Regular presentations to forums from outside experts keep Group and Divisional executives up to date with the latest developments in our industry and operating environment.

Trading forums

Our trading forums consist of the Food, Liquor, General Merchandise and Cellular Forums. During the year, Massmart’s trading forums continued to consolidate meaningful commercial objectives such as operationalising the key legislative requirements arising from the Consumer Protection Act, Regulation of Interception of Communications and Provision of Communication-Related Information Act (RICA), Foodstuffs, Cosmetics and Disinfectant Act (FCD Act), Tobacco Act and Medicines Act. Internal product category reviews and joint strategic supplier reviews continued to be key focus areas.

Following on the successes of the prior year, key strides were made in our Food Safety Management System piloted in Makro, including enhancements made to our product recall processes. Notable achievements of the trading forums this year included the vendor conferences held across the country to prepare our vendors for the enactment of the Consumer Protection Act.

Trading forums continued to consolidate meaningful commercial objectives such as:

  • Joint strategic supplier reviews
  • Internal product category reviews
  • Collaboration in respect of environmentally sustainable practices

Trading forums consist of:

  • Food
  • Liquor
  • General merchandise
  • Cellular

Functional forums

Our functional forums are the Technology, Information and Process (TIP), Operations, Finance, and Human Resources Forums. These focus on the management of skills and the procurement of resources and services required to support key Group-wide activities.

The HR Forum continued its focus on training and development and talent management. The Massmart Corporate University, a virtual institution, is the primary institution for the deployment and management of our development programmes (Executive Development Programme, Leadership Development Programme, Graduate Development Programme, Functional Skills Training).

The TIP Forum steered the Group through a number of successful significant IT projects over the year and continues to implement COBIT which is an internationally accepted IT Governance Framework recommended by the King III Report on Corporate Governance. The Operations Forum focused primarily on collaboration in respect of environmentally sustainable practices.

Functional forums focus on the management of skills and the procurement of resources and services required to support key Group-wide activities:

  • Technology, Information and Process (TIP)
  • Operations
  • Finance
  • Human Resources

SHARED SERVICES

The Shared Services teams provide services to the Divisions that can be provided more efficiently as a group than Divisions can source individually. These services are requested by the Channel forums and are ultimately accountable to these forums for their performance. These services must respond to divisional needs and be of higher value – measured as quality, cost and benefit – than can be sourced externally or generated inside the Division. A Shared Services team’s relationship with the Divisions is one of a service provider that must strive for excellence and become the best among competitors. The Divisions are their customers and their reason for existing.

Shared Services currently includes: Supplier Liaison and Administration; International Commerce; Employee Benefits and Shared Private Label management.

The Supplier Liaison and Administration team achieves savings by negotiating supplier contracts at Group level. The International Commerce team handles the treasury and logistics aspects of importing products directly to be sold across our Divisions. The Shared Private Label team manages various brands that are private or exclusive to Massmart and shared across trading Divisions. These brands have achieved category penetration ranging from 7% to 84% across the Group.

The Shared Services teams provide services to the Divisions that can be provided more efficiently as a group than Divisions can source individually:

  • Supplier contract negotiation and administration
  • International commerce
  • Employee benefits
  • Shared Private Label management


Other products and services from Massmart

11-11-2011

Executive Committee

Commenting on the group’s prospects post the Walmart transaction, Pattison said he expected the benefits of the relationship would only show through in the group’s 2013 financials and beyond. Massmart has delivered a robust operational performance, underpinned by strong sales growth, market share gains, a healthy increase in operating profit and effective cost controls.