Iran’s Population Iran’s Area80,000,000 1,648,195 km2Iran’s GDP Rank FMCG Market Size 18th $60 BillionForeign Exchange Reserve Number of Convenient Stores $120 Billion 175’000 2
IRAN CASH & CARRYJune 2016 | Iran: The $1trillion Growth Opportunity 3
The history ofStankoimport of Iran Ali Asghar KeyvanGhafelebashi (Seyedin) Ghafelebashi (Seyedin) Proprietor CEO Stanko Import-Iran Company Stanko Import-Iran CompanyBefore we delve deeper into the intricacies of our 1st cash and carry branch,which is of a particular importance as it will operate as our headquaters, wewould like to draw your attention to the roots of our family and the history ofour company. Initially, my father, Seyyed Ali Asghar Ghafelehbashi (knownas Mr. Seyyedin) started a number of successful import businesses. Afteracquiring several years of experience, he established Stankoimport of Iranaround 50 years ago in 1967. His great entrepreneurial spirit was the resultof a 1,000 year old business tradition running in our family, since the timeour ancestors owned caravans trading on the silk road. Our long-standingpassion for trade is reflected in our family name, which means the leaderof a caravan. One could say business is in our DNA.Under my father’s leadership, Stankoimport of Iran became the first andlargest metalworking machinery showroom in Asia. In the 70s and 80sStankoimport carried an inventory of over 850 machines across 50 differenttypes at all times. In the course of 20 years of operations, Stankoimport ofIran captured %75 market share by selling high-quality Soviet machinery atthe lowest price. With more than 40,000 light and heavy industrial machinessold, Stankoimport of Iran became the engine that drove Iran from a mainlyagrarian society to an industrial one. 4
IRAN CASH & CARRYFrom an early age my father taught me to creatively tackle problemsthat bring a greater benefit to society than to my bottom line. Myfather used to say that we should create wealth by thinking big, seeingeveryone as part of our team, and paying attention to the slightestdetail and consequence of our work. One of the most importantprinciples that was incorporated into the business environment I grewup in, was the philosophy that customers should always come first inthe sense that all business decisions should have their best interestat heart.After learning the tools of our trade from my father, who was mygreatest mentor, I travelled to Switzerland and the United States togain a perspective on international trade as well as to learn aboutthe high standards of doing business abroad. In the course of myeducation I was taught analytical and forecasting tools to be able toplan and foresee potential challenges ahead of time.Our past is not just a history, its a legacy. This is why based on myfamily background and professional experience, I can tell you thatStankoimport, the first location of our cash and carry business, willbe handled differently from the other 39 branches of the businessbecause it has been in the family for 50 years. 5
WHY IRANCASH & CARRY? (ICC)I am pleased to introduce you to Iran Cash and Carry’s business model.This company will be the first modernized cash and carry business in Iran.Iran’s isolation from the West for the last 40 years has created opportunities andchallenges in the country.Iran’s 60$ billion FMCG market has been dominated by small and medium sizedmanufacturers that provide %92 of all the FMCG products consumed locally.The retail channel for the industry is mostly made up of 175,000 small conveniencestores called baghalis (individually own shop) that have annual sales of 55$ billion andcontrol %91 of the market by providing service to 74 million people.Foreign companies have not entered the arena of Iran’s FMCG distribution market(except for Carrefour, which opened 3 branches in Iran) due to the sanctions that havebeen in place for the last 40 years. 6
IRAN CASH & CARRYConvenience stores (baghali) have been part of Iran’s societal fabric, which is whylocal major chain stores have only gained an %8.5 market share in the past 20 years.Customers visit local convenience stores daily and have therefore built rapport withthe vendors. This market structure is the reason why the future of industry reforms inIran should rely on providing business-to-business services to 175,000 baghalis withlowest price guarantee at cash and carry business model.These baghalis are our major target market. We believe, based on facts and figures,that Iran Cash and Carry can substantially improve distribution channels to 175,000Convenient stores (baghali) by reducing purchasing costs and increasing options forproduct purchases.After a year of research, we concluded to use the cash and carry business model,which is going to revolutionize the $60 billion FMCG industry. The present report isthe result of our conclusions based on how we can reinvent the FMCG supply chainto create a win-win situation for us, our suppliers, and our customers. By starting IranCash and Carry, we will create an economic engine of growth, which will propel theIranian FMCG supply chain. The Iran Cash and Carry team sees our situation as notonly a great opportunity, but also as a duty to be fulfilled.In my 35 years of experience I have not seen an opportunity as lucrative as the onepresented in this report. Without further ado, we hope you enjoy reading about IranCash and Carry. 7
Iran Cash & Carry: INTRODUCING A DISRUPTIVE BUSINESS PLAN FOR IRAN’S 60BILLION DOLLAR FMCG MARKET $60Billion According to McKinsey & Com- pany’s research, $60 billion worth of FMCG products was sold in Iran in 2015.Iran is an affluent country with a population size of 80 million peo- $55 Billionple, a surface area of 1,648,195 km2 and a $60 billion FMCG mar-ket. Iran’s FMCG distribution market is dominated by small conven- Annual Sales of 175’000 Baghaliience stores called baghalis. These convenience stores average 48 (Convenient Store)m2 in commercial space. 91% of Iran’s FMCG distribution marketis controlled by 175,000 baghalis (with an average store size of 48 92%m2). In such a lucrative market such as Iran, you may be surprisedto know that there are no cash and carry businesses in the country. According to McKinsey & Company’sBaghalis procure their inventory in the following two ways: research, 92% of all FMCG products1- they either make weekly visits to the wholesale bazaars and sold in Iran are domestically manu-must visit 12-15 stores each time or2- they are supplied by small and medium distributors that visit on factured, making the share of im-a weekly basis. ported FMCG products only 8%.From the manufacturing side of the FMCG market, factory ownersare struggling with working capital and cashflow due to a lack of 8.5%modern financing options which has led to manufacturing capacitybeing underutilized by 40%. These problems have arisen because: Market Share Belong To:1) interest rates are high; Hypermarkets, Supermarkets,2) Access to financing is limited; Discount Stores, Chain Stores,3) All products are sold on credit and it takes 90-120 days for man-ufacturers to cash their invoices. Internet SalesThe reason why Iran’s FMCG industry is a prime candidate for dis- 91.5%ruption is precisely because such a large industry is operating withan antiquated and ineffective supply chain and financial system. Convenient Stores (Baghalis) have aBy buying 7,000 SKUs of products and paying manufacturers in Market Share of 91.5% ofcash for purchases made, IRCC can solve cashflow problems offactory owners, reduce the price of which baghalis stock their in- $60 Billion FMCG Annual Retailventories by at least 12%, and reduce the price paid by end users. Sales. 8
IRAN CASH & CARRYWHAT IS THECASH AND CARRYBUSINESS MODEL?Five decades have passed from the time that the first cash and carry op- B2Berations sprouted all across the world with great success. For those unfa-miliar with the cash and carry business plan, the characteristics of these A new channel of distri-businesses are as follows. Cash and carry businesses allow convenient bution in the form of astores (baghali), fast-food chains, restaurants, and offices to visit oneconvinient location for all their FMCG needs, pay for the items in cash, B2B cash and carryand take the goods with them. Customers can profit from discounts bypurchasing foodstuff, beverages, cleaning supplies, meats, poultry, plas- 18%tic plates, and utensils at cash and carry centers. These discounts enablesmall convenience stores (baghalis) to compete with large hypermarkets Iran Cash and Carry’s grossthat have a much greater purchasing power. profit marginCompanies using the cash and carry business model are modern whole- 10%salers around the globe that differentiate themselves in the following fourcharacteristics: Iran Cash and Carry’s net1. Cash and carry companies are FMCG wholesalers that are B2B (business profit marginto business) oriented and require customers to visit their branches in orderto make purchases.2. Customers purchase products in bulk on a cash-only basis3.Customers have a range of several thousand sku to choose from.4. Prices at cash and carry centers are lower than distributors.The main customers of cash and carry are independent business people.By analyzing this lucrative project, ICC concluded that by invest-ing into Iran’s FMCG industry and replacing outdated businessmodels, eliminating middlemen, and re-organize an inefficientindustry. ICC can become one of the most profitable projects in the country.Who are our customers? Fast-food restaurantsCo-op stores 300,000 traditional stores across Iran, 175,000 of which are convenience stores Cateringbusinesses News-standsSmall wholesalers in Offices and Iran’s provinces organizations 9
Iran Cash & Carry has 3 major sales targetsProjected Sales by Projected Sales by 2021 2023Branches Sales Per Year Branches Sales Per Year 5 $272 17 $460Tehran, Razi million millionTehran, Azadegan 1-Tehran, Razi 10-Zahedan 2-Tehran, Azadegan 11-AhvazIsfahan 3-Isfahan 12-Bandar Abbas 4-Tabriz 13-HamedanTabriz 5-Shiraz 14-Yazd 6-Karaj 15-Kermanshah,Shiraz 7-Semnan 16-Birjand 8-Sanandaj 17-Rasht 9-Kerman Projected Sales by 2027 Branches-Sub branches Sales Per Year 40-20 $850 million € 80Additional investment of million Euros will be required to build and operate additional 23 more branches. The projection of average daily sales for additional 23 branches is €35,000 per branch. McKinsey & companypredicted in their 2016 report that by the year 2035 Iran’s FMCG market will grow to $235 billion 10
IRAN CASH & CARRYINVESTMENT REQUIRETOTAL INVESTMENT REQUIRED FOR 5 BRANCHES (STAGE 1)Branch Name Investment required Annual Sale* Time to € 115’500’000 LaunchTehran, Central Branch € 26’500’000Tehran, Azadegan € 22’500’000 € 82’500’000 24-30 Isfahan € 6’000’000 € 24’750’000 Months Tabriz € 6’000’000 € 24’750’000Shiraz € 6’000’000 € 24’750’000Total € 67’000’000 € 272’250’000* Annuale sales base on 330 days * Gross profit is calculated to be 18% of sales* Net profit is calculated to be 10% of salesTOTAL INVESTMENT REQUIRED FOR 12 BRANCHES (STAGE 2)Branches Name Investment required for Annual Sale for each* Time to each branche branche Launch Karaj, Semnan, € 4,650,000 € 15,675,000 36-40Sanandaj, Kerman, Months Zahedan, Ahvaz, Bandar Abbas, Hamedan, Yazd,Kermanshah, Birjandand Rasht branches Total Investment re- € 55’800’000 € 188’100’000quired for 12 branches* Annuale sales base on 330 days * Gross profit is calculated to be 18% of sales* Net profit is calculated to be 10% of salesNumber of Branches Investment required for 17 Annual sale for 17 branche 17 branche € 460’350’000 € 122’800’000 11
Investment Needed to Establish Tehran’s Razi Square BranchBranch Sales Target Working Capital Equipment Use of Land and Construction ACentral Tehran €350,000 /day €8,500,000 €5,500,000 €12,500,000 Total Investment Required: €26,500,000Branches Target annual sales* Gross profit** Net profit***Central Tehran €115,500,000 €20,790,000 €11,550,000 * For annual sales figures, each financial year is assumed to be 330 days A: ** Gross profit is calculated to be 18% of sales Rahn ()رهن: This is a process *** Net profit is calculated to be 10% of sales by which the rentee allows the renter to use a property withoutKey points: the need to pay monthly rent. Instead, the renter entrusts1- Working inventory shall be: purchased on a cash-basis, approved by two individu- the rentee with a deposit forals, digitally trackable, and processed through the company’s bank; a specified amount of time,2- The company expects to hit its target annual sales 6 months after the start of which is the duration of theoperations; contract. At the end of the con-3- The required equipment for each branch includes: goods handling equipment (i.e. tract period, the rentee will sim-order pickers, narrow isle trucks, and forklifts), software (i.e. ERP, YMS, TMS, WMS), ply receive his/her deposit inshelving, computers, cameras, and office equipment. All these purchases will be ap- full, no debt will be outstanding,proved by two pre-determined individuals; and the property will be handed over to the rentee. BasicallyTehran’s central branch is an exception: rahn enables the rentee use of a property while the renter canThe 5,750 m2 land for Iran Cash and Carry’s headquarters will be the only property benefit from the rentee’s cashthat will not be purchased outright, instead it will be rahnedA for 7 years. The compa- for a period of time. Since theny’s headquarters will be strategically positioned in the heart of Tehran’s wholesale Stankoimport property has ancenter, located above Anbar Naft St. Around 10,000 FMCG B2B customers daily vis- emotional and historic signif-it the areas of Anbar Naft, Molavi, and Bazaar to make purchases for convenience icance to our family, we arestores (baghalis), office buildings, restaurants, street stands etc... These customers unwilling to sell the property towill be our primary target market and they will be guaranteed the lowest prices in the Iran Cash and Carry, thereforearea. The money deposited to rahn the headquarters can be reimbursed at the end the property will be rahn to Iranof 7 years or the contract may be extended as desired. It is worth noting that the ma- Cash and Carry.jority of the money deposited to rahn the abovementioned property will be spent onpreparing the perimeter for the start of operations. The key modifications required toprepare the property are as follows:1. Construction of a 2500 m2 warehouse with a height of 20 m, which will provide thecentral branch with an additional 50,000 m3 worth of storage space;2. Construction of 2500 m2 of office space above the main warehouse;3. Construction of an underground parking space with a capacity of 300 vehicles;4. Yard construction;5. Purchase of a property on the west wing of the property, which will create an addi-tional strategic entry and exit point, while also providing space for the constructionof a cafeteria among other things;6. Construction of a cold storage warehouse;7. Construction of a sub-zero temperature-controlled warehouse;8. Construction of: a prayer room, a hospitality room for customers, and a changingroom;9. Renovation of old sections of the property;10. Renovation of 3 old warehouses, one of which will be dedicated to processedprotein-based products (such as sausages, kelbasas, and the like). 12
Timeline IRAN CASH & CARRYa. Construction of a 2500 m2 warehouse with a height Monthof 20 m 1 Receipt of € 12.5 million tob. Construction of 2500 m2 of office space;c. Construction of an underground parking space with rahn the property locateda capacity of 300 vehicles; near Razi sq.d. Yard construction;e. Purchase of a property on the west wing of the 22 Receipt of € 5.5 million toproperty which will create an additional strategic purchase equipmententry and exit point, while also providing space for theconstruction of a cafeteria among other things; Receipt of € 8.5 million to purchasef. Construction of a sub-zero temperatures warehouse; working inventory and start phase ofg. Renovation of old sections of the property;h. Renovation of 3 old warehouses, one of which will bededicated to processed protein-based products (suchas sausages, kelbasas, and the like).Purchase of: goods handling equipment (i.e. orderpickers, narrow isle trucks, and forklifts), software (i.e.ERP, YMS, TMS, WMS), shelving, computers, cameras,and office equipment.In these two months the company will hire and trainthe required personnel. 24 sales and marketingImmediately after the first branch of Iran Cash and 26Carry is established, the sales and marketing phaseshall begin, so that the branch may hit € 350,000 insale as soon as possible. 13
Isfehan, Shiraz, and Tabriz branchesBranches Sales Target Working Capital Equipment Land and ConstructionIsfahan €75,000 /day €2,150,000 €600,000 €3,250,000Tabriz €75,000 /day €2,150,000 €600,000 €3,250,000Shiraz €75,000 /day €2,150,000 €600,000 €3,250,000 Total Investment Required: €18,000,000Branches Target annual sales* Gross profit** Net profit***Each Branch € 24,750,000 € 4,455,500 € 2,475,0003 Branches €74,250,000 € 13,366,500 € 7,425,000* For annual sales figures, each financial year is assumed to be 330 days** Gross profit is calculated to be 18% of sales*** Net profit is calculated to be 10% of salesIn purchasing property for our operations, Iran Cash and Carry will be looking to buy a 12,000-15,000 m2 plot. Timeline Month € 3,250,000 is require to Receipt of €600,000 to 1 purchase property and purchase equipment construction Purchase of handling equipment and software.In these two months the company will hire and train In purchasing property for our operations, Iran Cash and Carry will be looking to buy the required personnel. a 12,000 - 15,000 m2 plot. Warehouse size 6000 m2 22 Receipt of € 2,150,000 to 24purchase the required working 26 inventory After each branch of Iran Cash and Carry is setup, the sales and marketing phase will be pursued aggressively to shorten the time required to hit € 75,000 in daily sales. 14
IRAN CASH & CARRY Azadegan branch in Tehran Branch Sales Target Working Capital Equipment Land and Construction Tehran - € 250,000 € 10,000,000 € 4,500,000 € 8,000,000Azadegan Total investment required: € 22,500,000 Branch Target annual sales* Gross profit** Net profit*** Tehran - € 82,500,000 €14,850,000 € 8,250,000 Azadegan * For annual sales figures, each financial year is assumed to be 330 days ** Gross profit is calculated to be 18% of sales *** Net profit is calculated to be 10% of sales Timeline MonthIn purchasing property for Azadegan Branch of IranCash and Carry we will be looking to buy a 35,000m2 1 € 8,000,000 is require to purchaseplot to provide room for future expansion. Warehousesize 7500 m2 property and constructionPurchase of handling equipment and software. 22 Receipt of€ 4,500,000 to purchase equipmentIn these two months the company will hire and trainthe required personnel.After Azadegan Branch of Iran Cash and Carry is 24setup, the sales and marketing phase will be pursuedaggressively to shorten the time required to hit Receipt of € 10,000,000 to€ 250,000 in daily sales. purchase the required working inventory 26 15
Sanandaj, Kerman, Zahedan, Ahvaz, Bandar Abbas,Hamedan, Yazd, Kermanshah, Birjand, Semnan, Gorgan, and Rasht branchesBranches Sales Target/ Working Equipment/ Land and Total investment each branch Capital/each each branch Construction/ required for each each branch branch branch:Karaj, Sanandaj, € 47,500 € 4,650,000 Kerman, Annual sales for eachZahedan, Ahvaz, branch: Bandar Abbas,Hamedan, Yazd, € 1,350,000 € 350,000 € 2,950,000 Kermanshah,Birjand, Semnan, € 15,675,000 and Rasht branchesTotal investment required for 12 branches: Total Annual sales for 12 branches: € 55,800,000 € 188,100,000Branches Target annual sales* Gross profit** Net profit***Karaj, Sanandaj, € 15,675,000 € 2,821,500 € 1,567,500 Kerman, € 33,858,000 € 18,810,000Zahedan, Ahvaz, Bandar Abbas,Hamedan, Yazd, Kermanshah,Birjand, Semnan, and Rasht branches12 Branches € 188,100,000* For annual sales figures, each financial year is assumed to be 330 days** Gross profit is calculated to be 18% of sales*** Net profit is calculated to be 10% of sales 16
Timeline IRAN CASH & CARRYIn purchasing property for group C branches of Iran MonthCash and Carry we will be looking to buy a 10,000m2plot. Warehouse size 5000 m2 1 € 2,950,000 is require to purchase property and constructionPurchase of handling equipment and software. 22 Receipt of € 350,000 to purchase equipmentIn these two months the company will hire and trainthe required personnel.After each branch of Iran Cash and Carry is setup, 24 Receipt of € 1,350,000 tothe sales and marketing phase will be pursuedaggressively to shorten the time required to hit purchase the required working€ 47,500 in daily sales. inventory 26 17
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Tehran branch is theprimary and the mostimportant branch of Iran cash & carryTo place Tehran state in the perspec- 18,909 km²tive of international trade, the followingfacts can be eye-opening. The state of Tehran Province is one of the 31Tehran not only has a population of 15 provinces of Iran. It covers anmillion people, which is greater than the area of 18,909 square kilometrespopulation of 125 countries in the world, and is located to the north of thebut it is also the economic hub of Iran. central plateau of Iran.The market of Tehran is of special impor-tance to businesses in that residents ofthis state have a 30% higher disposableincome with respect to the rest of thepopulation. The potential of Tehran stateare even more apparent in the statisticsthat follow: 20
IRAN CASH & CARRYTehran’s 2018 population is nowestimated at 15,000,000.57,000 convenience stores (baghali)are located in the state of TehranThe average sale of each conveniencestore (baghali) is $1,000 per day.therefore every day $57 millionworth of goods are sold in said stores.21
Daily sales of €52 million through 57,000 convenience stores in Tehran statePerhaps it is difficult to believe that 57,000 convenience stores op-erate in Tehran state and sell €52 million on a daily basis.If Tehran state were a country, it would have a larger populationthan the current population size of 125 countries.http://www.worldometers.info/world-population/population-by-country/ More than €11million/ per day The market size of just the following 14 products is more than €11 million per day in the state of Tehran. Each person living in Tehran consumes 175 Each person living in Tehran consumes 20 kg eggs annually. of cooking oil.Population size of Tehran state is 15 million people Population size of Tehran state is 15 million people 20 kg cooking oil consumption per person * 15 million15 million people * 175 eggs per annum = 2,625,000,000 people = 300,000,000 kg of cooking oil consumption eggs per annum per year 2,625,000,000 * € 0.06 per egg = €157,500,000 300,000,000 kg annual demand * €1 = €300,000,000 annual market size annual market size of cooking oils Tehran state consumes € 431/000 worth Tehran state consumes € 800,000 worth of of various eggs per day. various cooking oil per day. 22
IRAN CASH & CARRY Each person in Tehran consumes 8 kg of Each person in the state of Tehran consumes kielbasa and sausages per year. 10 kilograms of beans per annumPopulation size of Tehran state is 15 million people Population size of Tehran state is 15 million people15 million people * 8kg per annum = 120,000,000 kg per 15 million people * 10 kg per annum = 150,000,000 kg annum consumption of annual consumption 120,000,000 kg per annum * € 5.5 = € 660,00,000 150,000,000 kg per annum * € 1.2 = annual market size annual consumption of € 180,000,000Tehran state consumes € 1.8 million worth Tehran state consumes € 500,000 worth of of sausage and kielbasa products per day. various beans per day.Each person in the state of Tehran consumes Each person in the state of Tehran consumes 1.5 kg of tea per year 40 kg of rice per year.Population size of Tehran state is 15 million people Population size of Tehran state is 15 million people 15 million people * 40 kg per annum = 600,000,000 kg 15 million people * 1.5 kg per year = 22,500,000 kg per year consumption per annum consumption of rice 600,000,000 kg per annum * € 1 = € 600,000,000 22,500,000 kg per year * € 8 = € 180,000,000 consumption of rice per yearTehran state consumes € 500,000 worth of Tehran state consumes € 1.6 million worth various tea per day. of various rice per day. 23
Each person in the state of Tehran consumes Each person in the state of Tehran con- 21 kg of sweets per year sumes 23 kg of tomato paste per year Population size of Tehran state is 15 million peoplePopulation size of Tehran state is 15 million people15 million people * 21 kg per year = 315,000,000 kg per 15 million people * 23 kg per year = 345,000,000 kg per year consumption year consumption 315,000,000 kg per year * €2 = € 630,000,000 345,000,000 kg per year * €1 = € 345,000,000 consumption per year consumption per year Tehran state consumes € 950,000 worth ofTehran state consumes € 1.7 million worth various tomato paste per day. of sweets products per day. Each person in the state of Tehran con- Each person in the state of Tehran consumes 42 sumes 10 cans of canned tuna per year L (equivalent to 28, 1.5 L cans) of carbonatedPopulation size of Tehran state is 15 million people drinks per year15 million people * 10 cans per year = 150,000,000 cans Population size of Tehran state is 15 million people per year consumption 15 million people * 42 L per year = 630,000,000 L per 150,000,000 cans per year * €1 = €150,000,000 year consumption consumption per year 630,000,000 L per year * € 0.5 = € 315,000,000 consump-Tehran state consumes € 400,000 worth of tion per year canned tuna per day. Tehran state consumes € 863,000 worth of various carbonated drinks per day. 24
IRAN CASH & CARRY Each person in the state of Tehran con- Each person in the state of Tehran consumes sumes 30 kg of sugar per year 5 kg of dates per yearPopulation size of Tehran state is 15 million people Population size of Tehran state is 15 million people15 million people * 30 kg per year = 450,000,000 kg per 15 million people * 5 kg per year = 75,000,000 kg per year consumption year consumption 450,000,000 kg per year * € 0.58 = €261,000,000 75,000,000 kg per year * € 1 = € 75,000,000 consumption per year consumption per year Tehran state consumes € 205,000 worth ofTehran state consumes € 715,000 worth of various dates per day. sugar per day. Each person in the state of Tehran con- Each person in the state of Tehran consumes sumes 1 box of tissues per year 12 L of shampoo per yearPopulation size of Tehran state is 15 million people Population size of Tehran state is 15 million people15 million people * 12 box per year = 180,000,000 boxes 15 million people * 12 L per year = 180,000,000 L per year consumption per year consumption 180,000,000 L per year * €2 = € 360,000,000 consump-180,000,000 boxes per year * € 0.8 = € 144,000,000 con- tion per year sumption per year Tehran state consumes € 980,000 worth ofTehran state consumes € 394,000 worth of various shampoo per day. tissues products per day. 25
Geographic access ofIran Cash and Carry(Tehran’s Branch) 26
IRAN CASH & CARRY ICC Tehran branch, is in the heart of Tehran’s food whole- sale center1 Distance to Edam roundabout (Mohammadiye): 1.9 km = 25 min on foot = 8 min by car2 Distance to Molavi street (the beginning of the whole- sale area of Tehran): 650 m = 9 min on foot3 Distance to the FMCG wholesale district called “Anbare Naft”: 240 m = 3 min on foot4 Distance to Tehran’s Grand Bazar: 4.5 km 27
Geographic location andstrategic positioning withrespect to strategic highways(ICC / Tehran’s Branch) 28
IRAN CASH & CARRY Iran cash & Carry is connected to the North, West, and1 East by way of the strategic highways of Navvab, Imam Ali (a.s), Besat, and Sa’idi.2 Less than 1 km away from Rah Ahan roundabout of Teh- ran.3 Less than 2 km away from the goods transport center.4 Less than 2 km away from the southern end terminal for buses. 29
This map depicts the state of Tehran, which includesTehran city as well as surrounding cities, with a popu-lation of 15 million people. 30
IRAN CASH & CARRYTehran Countyaverage household size: 3.2Number of household in Tehran county: 4,287,733average household expenditure: $720www.financialtribune.comwww.isna.ir 31
ICCTehran Branch 32
IRAN CASH & CARRY ICC Tehran branch metro access points Currently, the closest metro station to ICC Tehran branch, is the Rah Ahan station. Mahdiye metro sta- tion will replace Rah Ahan station as the closest one to our lo- cation after its inau- guration.33
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Enterprise Resource Planning (ERP)Enterprise resource planning (ERP) is business process management software that al-lows an organization to use a system of integrated applications to manage thebusiness and automate many back office functions related to technology, servicesand human resources. SAP is a market leader in pro- viding ERP (Enterprise Resource and Planning) solutions and services. In this chapter, we will try to understand more on ERP and where it should be used. In addition, we will learn the implementation techniques of ERP along with the ERP pack- ages available in the market. 36
IRAN CASH & CARRY Synchronize business with ERP software from SAPRun fast and tightly integrated business pro-cesses with enterprise resource planning(ERP) systems from SAP. No matter your in-dustry or business size, our real-time ERP soft-ware can help connect your people, de-vices, and networks – and create a digitalcore for implementing new technologies. Solve specific needs with enterprise resource planning softwareSimplify IT and enhance business productivityPrepare company for digital applications and processes with a next-gen ERP plat-form that combines a simplified data model with the speed of in-memory computing.Simplify work life with an ERP business systemControl whole organization – easily and efficiently – with one ERP application thatsimplifies all business processes. Monitor and analyze process performance with indi-cators and dashboard analytics. 37
warehouse management system (WMS)A warehouse management system (WMS) is software and processes that allow organi-zations to control and administer warehouse operations from the time goods or materialsenter a warehouse until they move out. Operations in a warehouse include inventory man-agement, picking processes and auditing.For example, a WMS can provide visibility into an organization’s inventory at any time andlocation, whether in a facility or in transit. It can also manage supply chain operations fromthe manufacturer or wholesaler to the warehouse, then to a retailer or distribution center. AWMS is often used alongside or integrated with a transportation management system (TMS)or an inventory management system. 38
IRAN CASH & CARRYYard management system (YMS)A yard management system (YMS) is a software system designed to overseethe movement of trucks and trailers in the yard of a manufacturing facility,warehouse, or distribution center. YMS provides real-time information on thelocation of trailers in the yard and allows yard employees to move trailersfrom staging to docks to fill orders in an efficient manner.YMS is often used in conjunction with warehouse management systems(WMS) and transportation management systems (TMS). It may also have ra-dio frequency identification (RFID) technology built in for faster and moreaccurate tracking. 39
Transportation management system (TMS) A transportation management system (TMS) is a subset of supply chain manage- ment (SCM) that deals with the planning, execution and optimization of the phys- ical movements of goods. In simpler terms, it’s a logistics platform that enables users to manage and optimize the daily operations of their transportation fleets. TMS is offered as a module within enterprise resource planning (ERP) and SCM suites and helps organizations move inbound -- procurement -- and outbound -- shipment -- freight using tools such as route planning and optimization, load building, operations execution, freight audit and payment, yard management, order visibility, and carrier management. The ultimate goals of using a TMS are to improve shipment efficiency, reduce costs, gain real-time supply chain visibility and enhance customer service. Typically, TMS serves both shippers and logistics service providers. Manufactur- ers, distributors, e-commerce organizations, wholesalers, retailers and third-party logistics (3PL) companies are some of the major users of TMS software. TMS has gained traction over the past decade, as it has emerged as an enabler of seamless global trade and logistics management. By enabling information ex- change across functional silos; amid geographically disparate operations; and in various languages, currencies, and business units, it has developed into an enter- prise software that is finding growing appeal. Furthermore, its functionalities make it suitable for organizations that not only have complex logistics operations, but also those that may have basic transportation needs. Given the factors above, a 2016 Gartner report predicted that the global TMS market will grow at a compound rate of 6.95% and reach $1.72 billion by 2019, up from $1.23 billion in 2014. 40
IRAN CASH & CARRY Wireless WarehouseCommunications SystemsWireless warehouse communications systems allow a warehouse manager andemployees to do a number of different things in addition to communicating witheach other anywhere in the warehouse. Over time, these systems have becomevital to the function of the warehouse. However, they weren’t always as useful.Thanks to vast improvements in communications equipment, today’s communi-cation systems are much more impressive.The First Communications System – the Speaker SystemThe first basic form of wireless communication was a one-way speaker systemor PA system. The manager would speak into a microphone that would relayhis message through the speakers in the warehouse. He could make announce-ments and ask that a specific employee come to the office or go to one of thewired landline phones in the warehouse and call, but that was about it.It was better than trying to find someone in the warehouse, but it was limited inhow effective it truly was. However, some warehouses still use these PA systemstoday to make warehouse-wide announcements.Walkie-Talkies: Two Way CommunicationThe next step in communication within the warehouse was truly wireless. Employ-ees began carrying walkie-talkies. In the beginning, these devices were paired,and each pair was limited to talking to each other. 41
Order-taking online system: the new generation’s solutionOnline!With Iran Cash andCarry’s mobile appli-cation and order-tak-ing website, customerscan register their or-ders from any locationin Iran with greater ac-curacy, flexibility, ease,and peace of mind.Customers will be ableto digitally browse allour inventory from theirphone, convenientlyregister their purchaseorders, and then cometo one of our conve-nient locations to pickeverything up or re-quest a delivery. 42
IRAN CASH & CARRYOn par with other cash and carry businesses around the world, IranCash and Carry will offer customers the choice to make all theirpurchases with ease and online from any location. From our easy-to-use application or our websites, customers will be notified of anynew offers and products that are made available. By logging in-putting their password and username, customer will also be able toselect the type and quantity of the products they wish to purchase,finalize their order, and then process their payments electronically.Based on the size of each order and current work volume, our sys-tems will inform the customer of the earliest possible delivery time.As soon as orders are received on our end, specially stationed oper-ators will send details of the order to our warehouse and accountingdepartment. Thereafter, our warehouse personnel will assemble theorders received and send them to loading bays where after a finalcheck the goods will be loaded and delivered.Advantages of using Iran Cash and Carry’s online order registrationsystem:1- Easy to use2- Accessible anywhere with an internet connection3- The most up to date offers and prices at your fingertips4- Helps reduce traffic within the city centre 43
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IRAN CASH & CARRYWarehouse logistics Equipment Compared to reach trucks, VNA have many advantages: While reach trucks can achieve a huge amount with regards stacking and picking in restricted spaces, they cannot compete with VNA trucks which are designed and optimised to operate in a specific warehouse setup. VNA can be designed for manual operation but often are semi-automatic and increasingly ‘fully-automated’ as technology moves towards less human intervention. A ‘man-down’ VNA truck has a rotating mast, making pallet retrieval easy and can operate in a wide variety of situa- tions, including warehouses, loading bays and open ar- eas. ‘A man-up’ VNA places the operator in a telescoping platform, enabling them to get close to the stacking and picking activity. These ‘man-up’ VNA are perfect for high density warehouse storage situations and often work with guidance systems built into the warehouse floor, making navigation simple and controllable. 45
Personnel, Organizational Infrastructure, and Technology We envision an IRCC that will generate billions of Euros worth of sales and has several thousand em- ployees. In order to materialize our vision, we need to lay a solid foundation for our company. Just as a building needs a deep foundation to rise without the danger of collapsing, so too the rise of a successful company relies on three fundamental pillars that we are going to focus on in this section of the report. These three pillars are: 1. Personnel 2. Organizational Infrastructure 3. Optimal use of technologyPeople are the lifeblood of organizations because even state-of-the-art technologies and cut-ting-edge organizational infrastructures will not benefit a company without qualified personnel. Thegrowth, profit, and integrity of IRCC depends on hiring the right people, which is why the recruitingprocess at the company will be of particular importance. In addition to following international bestpractices for recruiting, IRCC will establish a couple of additional guidelines. In the initial stages of therecruiting process, candidates will be required to pass the following tests in addition to backgroundchecks:1. IQ2. EQ3. Personality4. Job knowledge5. Skill assessment6. Physical ability 46
IRAN CASH & CARRY To prevent nepotism from the application process at IRCC, not only will a special team be responsi- ble for recruiting, but also the manager of each branch must be present when a candidate is hired. The risk of hiring unqualified candidates because of their connection to a particular person is greatly re- duced when a team is responsible for making the fi- nal decision instead of just one person. The branch manager and IRCC’s recruiting team will hold each other responsible, thereby creating a more trans- parent system. As many CEOs have heard, “it’s not the people you hire that are the problem, it’s those you fail to fire.” This simple philosophy has led IRCC to mandate every employee to participate in monthly perfor- mance evaluations aimed at identifying poor per- formers, unethical individuals, and those who do not fit the company’s culture. Finally, IRCC will have above average compensa- tions for its employees to maintain a content work- force that would not want to jeopardize their jobs by acting unethically.In order to be as transparent as possible, IRCC 1. The team will bear the responsibility of deliver-will be evaluated on a regular basis by a team ing regular and thorough reports on the progressof experts composed of university professors of IRCC;with 25 to 30 years of industry experience. This 2. Only shareholders can fire/hire members of theteam will be called “the eyes of the sharehold- team;ers” (henceforth the team) and will be selected 3. The team will be only answerable to the share-by and answerable to only the shareholders. In holders;other words, only the shareholders will be able 4. Team members will not be able to hold posi-to hire, fire, and approve the paychecks of tions in the company, in order to maintain neu-members of the team. Team members will have trality;complete access to financial and administrative 5. Salaries of team members will be approved bydata compiled by IRCC, so that their reports may the shareholders.be as accurate as possible. Shareholders will re-ceive regular SWOT analyses (Strengths, Weak-nesses, Opportunities, and Strengths), progressreports on corporate goals, and suggestions fromthe team. These same reports will be handed toIRCC’s CEO, 1 week before it is sent to sharehold-ers, so that they are scrutinized for accuracy. Inthe case that the CEO does not agree with thefindings of the team, he will have time to gath-er facts and figures to independently presenthis own case to the shareholders, however if thereports are judged to be accurate, the CEO willhave time to contemplate potential solutions foridentified weaknesses.In conclusion, the team called “the eyes of theshareholders” will have the following character-istics:47
The rapid growth of IRCC will not only require with consumers? What manufacturer offers havecutting edge technologies and an intelligent hit the market? What new products have be-workforce, but will also need the help of knowl- come available? Which products have sufferededgeable and experienced advisors in various in quality? Which products are scarce? All thesefields of business. IRCC cannot hope to grow to questions can be answered by baghalis. By ap-its potential without the foresight and insight of pointing 100 key baghalis as IRCC ambassadorsexperts who have walked this path before with in Tehran and several others in each city, IRCCsuccess, which is why the company will create will be able to gather detailed reports that willan advisory board, made up of pioneers in sys- help answer strategic questions and make cru-tems management, inventory control, software cial decisions. In return, IRCC’s ambassadors willdevelopment, corporate management, and receive special offers, have access to additionalworkflow management. To better navigate ex- services, and take precedence over other cus-ternal trends, in addition to internal challenges, tomers in certain situations.IRCC will invest in establishing relationships withthe old-timers of the wholesale and FMCG retailmarkets.If IRCC intends to stay ahead of the market, it willneed to gather constantly updated informationfrom the market. Which products are popular 48
IRAN CASH & CARRY aspects of the business from any location with the help of cloud-based technologies. The benefits of having an integrated management system in place do not stop there. In addition to monitoring overall financial metrics, managers and share- holders will be able to access on-site HD security cameras equipped with facial recognition and voice-recording capabilities that will be installed in all branches to stop fraud and thievery in their tracks. IRCC’s managers are not looking to only adapt to today’s technologies, however, we are looking to shape the future as well. Iran Cash and Carry aims to be a pioneer in adapting cutting-edge technologies to the field of cash and carry businesses. We have seen how Artificial Intelligence (AI) and the Internet of Things (IoT) has in influenced many aspects of daily life and has been proliferated through several indus- tries, therefore if we want to penetrate the mar- ket we need to make our IT department the most advanced and progressive part of Iran Cash and Carry. Our vision is to apply cutting-edge science like Artificial Intelligence and deep-learning to our field. According to an article posted by McKinsey & Company: “Artificial intelligence (AI) stands out as a transformational technology of our digital age—and its practical application throughout the economy is growing apace ... Ultimately, the value of AI is not to be found in the models themselves, but in companies’ abilities to harness them.” This is why Iran Cash and Carry envisions an AI subdi- vision within our IT department, spearheaded by top AI experts from Tehran’s Sharif University. The goal of the subdivision will be to develop practical applications of AI and deep learning to the field of cash and carry.Cutting-edge technologies coupled with flexible,educated, and trained management teams willenable IRCC to increase safety margins, providegreater transparency, and correct mistakes at afaster pace. Integrated and scalable enterpriseresource planning software (ERP) can central-ize and streamline the flow of both work and ofinformation to the extent that the company willoperate with greater efficiency, while also givingshareholders and managers an accurate finan-cial picture of the company at any moment intime. Nowadays, top ERP software (such as thoseprovided by the company SAP) are capable ofsyncing with other software and platforms such as:Customer Relations Management (CRM), E-com-merce, Workflow Management, Supply ChainManagement (SCM), Warehouse ManagementSystems (WMS), social media platforms, etc. The in-tegration of different software will give a truly birds-eye view of IRCC’s entire operation at a glance,which will give the flexibility to virtually look into all 49
CONCLUSIONFortune favors the bold. When Otto Beisheim founded theMetro Group in 1964, He knew in his heart that he wouldsucceed and expand his business all over the world. I amsure that from the early stages of his venture, Mr. Beisheimforesaw Metro Group becoming a world renowned cashand carry business because when another pioneer, JeffBezos, founded Amazon, his vision of creating the largeste-retail store carried him through thick and thin until hematerialized his dream. Many visionaries like Jeff Bezosand Otto Beisheim helped shape society into the form it istoday. The beliefs and convictions of these individuals car-ried them through uncharted territory and unto a futurenobody else had seen.The situation we face with Iran Cash and Carry is unlikewhat the aforementioned forerunners faced. They had tomake decisions on gut feelings, while we have facts andfigures to substantiate our decisions because our path hasalready been charted. We tread in the footsteps of thepeople who have already successfully entered the cashand carry business. The guesswork in our field has largelybeen eliminated because we have substantiated market 50
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