Delivering Availability:
 Fulfilling consumer wishes
better, faster and at less cost


          Breakout 3.3 OSA


      ...
Session Overview


 • OSA – an overview

 • ASDA and Unilever – Theatre and Factory

 • L’Oreal and dm-drogerie markt

 • ...
OSA – an overview


 Dr Paul Chapman
 Oxford University
Saïd Business School
Saïd Business School




  Europe’s newest and fastest growing business school.
  Known for faculty expertise in specialis...
OSA – An Overview


 • Status:
    – OSA remains a key challenge across Europe to fulfilling
      customers wishes.
    –...
On Collaboration


 “creating new value together” (Kanter, 1994)


 “(1) The pooling of appreciations and/or tangible reso...
Collaboration requires alignment
                           “creating new value together”      (Kanter, 1994)




        ...
“The pooling of appreciations and/or tangible resources”




                                                             ...
“creating new value together”




    S                 R
“creating new value together”




                         S                          R



    1) Shared goals …
    2) … ...
Theory into practice, using the ECR Roadmap …


                      Corporate Policy




            6. Evaluate        ...
Does the ECR Roadmap work?
Session Overview


 • OSA – an overview

 • ASDA and Unilever – Theatre and Factory

 • L’Oreal and dm-drogerie markt

 • ...
Asda and Unilever
Theatre and Factory
   Collaboration
          Saeed Anslow
              Asda
    Head of Availability ...
Theatre and Factory




  2nd Largest Retailer in UK   Operate in 23 categories,
  342 shops, 26 depots         World No. ...
ASDA - Approach
• Phase 1 (07/08) “Always Different”
  – Academic support using ECR roadmap
  – Asda cross functional team...
ASDA– Opportunities Phase 1

• Separate out factory from theatre

• Exploit Wal*Mart innovations

• Availability a busines...
ASDA– Solutions (Phase 1 Examples)

•On Shelf Customer Availability Measure
•New Operating Model - “Trailer to Shelf”
  – ...
On Shelf Customer Availability (OSCA)

 •   Corporate Epos based measure
 •   Launched April 2008
 •   Replaces 3rd party ...
One Best Way – Operating Model H&B, GM
One Best Way – Replenishment Example

                PRIORITY FILL 22:00 - 06:00 : NIGHT REPLEN COLLEAGUE




  o   Work ...
ASDA - Store Implementation


         Store Of Learning


                             What a Good Job Looks Like
Evaluation
               Health & Beauty   General
                                 Merchandise
Stockholding   20% reduct...
ASDA – Phase 2 (08-10) “Always Brave”


    •   Collaboration
    •   Factory approach
    •   Continuous Improvement
    ...
Asda and Unilever: A Leap of Faith
Unilever - OSA Vision
A relationship that has grown
  Asda/ Unilever      Global Journey
   UK Journey
                         40 pilots
  Proj...
Phase 2: Asda and Unilever

Vision:

• Deliver a step change in OSA and improve
  productivity

• Embed changes throughout...
Asda and Unilever - What?
           Health &   Chilled   Ambient   Generic
           Beauty

Apr –
Jun ‘08


Jul -
Aug ‘...
Asda and Unilever - How?
“Be Brave”

Suppliers   Trading    Supply   Distribution   Stores   Customer




            Asda and Unilever
      Susta...
Session Overview


 • OSA – an overview

 • ASDA and Unilever – Theatre and Factory

 • L’Oreal and dm-drogerie markt

 • ...
Delivery of make-up wall units


LEANER and FITTER
logistics concept for cosmetics setting
new standards
Content
Partners involved in the project
Facts and figures
Reasons for the project – the challenges
Targets
Procedure
Real...
Involved partners




•“Deutscher   Handelspreis” for 2007 for excellent image and social engagement
•High level position ...
Involved partners

     Turnover 2007: 180 Mio. €
     Branches: 20 national, 3 international
     Employees: 1.600
     C...
A multichannel pure player in beauty

     Channels                    Brands


Professional



Food, Drug and Mass


Parf...
No.1 in Beauty

                                                              17.100
       (in millions of euros)        ...
Facts and Figures
16,100 make-up unit walls in German retail for the
brands Maybelline and L’ORÉAL PARIS
Of them 1,900 at ...
Reasons for the project –
the occasional challenges

Missed deliveries of one part (products or unit-wall)
Support of the ...
Reasons for the project –
the permanent challenges

Separate delivery of products and wall unit
Installation and replenish...
Process overview before re-organisation


    L‘ORÉAL         Forwarder     Merchandiser   dm-store

B     Delivery       ...
Targets
   Reorganisation of the complex supply chain with the
objective of being in the right place at the right time and...
Procedure
Extensive analysis of the behaviour of consumers and
staff during installation of a unit wall
Process- and cost ...
Realization - Changes
│6 services from one hand
 │Storage
 │Due date control
 │Replenishment
 │Transport to POS
 │Installa...
Realization - Process overview after re-organisation

     L‘ORÉAL         Forwarder          Merchandiser   dm-store
B   ...
Realization




ready replenished unit wall at Hegele    arriving at POS   transportation at POS
premises




           u...
Results
Unique in the market
Integrated logistics-concept with EDI-DESADV
Concentrated transportation
No inconvenience for...
Thank you
Session Overview


 • OSA – an overview

 • ASDA and Unilever – Theatre and Factory

 • L’Oreal and dm-drogerie markt

 • ...
Context – OSA Linked to Corporate Mission
Progress


      % of Customer / Category Combinations
      where out of stocks are greater than 5%


            42%
   ...
A Typology of Shelf Out of Stocks


                          Shelf Out of
                            Stocks



         ...
Where to Start….


                          Shelf Out of
                            Stocks



                       Un-...
The improvement process starts from the shelf



 • Inconsistent demand is a root cause of
   service level failures

 • U...
ECR Road Map

                                             Call to
                    Corporate Policy         Action!


...
Call to Action


       Lost sales                  Additional Costs
• Store / brand switching      •   Damaged product
• ...
Engage and involve the right stakeholders


 • Store Operations

 • Store & Backroom design

 • Logistics & Distribution

...
Learn to see – go on a journey together



 • Follow products

 • Identify failure points

 • Analyse root causes

 • Brai...
Deliver results….

 25%
        22%

 20%                 18%                             Out of Stock Rate


            ...
Change in P&G scheduling helped lead to same
day delivery to store and 1 less days inventory
Clearer labelling on orders for split cases has
speeded up checking and reduced errors
Takeaways


 • OSA needs to be linked to corporate objectives and a joint
   “size of the prize” agreed

 • Speed up the i...
Session Overview


 • OSA – an overview

 • ASDA and Unilever – Theatre and Factory

 • L’Oreal and dm-drogerie markt

 • ...
In summary
 • Status:
    – OSA remains a key challenge across
      Europe to fulfilling customers wishes.
    – Solution...
ECR Europe Forum '08. On-shelf availability: approaches and solutions
ECR Europe Forum '08. On-shelf availability: approaches and solutions
ECR Europe Forum '08. On-shelf availability: approaches and solutions
ECR Europe Forum '08. On-shelf availability: approaches and solutions
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ECR Europe Forum '08. On-shelf availability: approaches and solutions

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On-shelf availability: approaches and solutions

The critical need to improve on-shelf availability will be highlighted and a collaborative approach to delivering results will be presented. Case studies will show how multifunctional teams and benchmarking were used to design new logistical processes and in-store routines. For senior managers who oversee categories and operations, this will provide solutions that address availability issues facing their customers.

Speakers: Saeed Anslow, Mark Ibbotson, Asda Wal-Mart; Bernd Krause, L’Oréal; Dr Paul Chapman, University of Oxford; dm-drogerie markt, Unilever. Facilitated by University of Oxford.

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ECR Europe Forum '08. On-shelf availability: approaches and solutions

  1. 1. Delivering Availability: Fulfilling consumer wishes better, faster and at less cost Breakout 3.3 OSA ECR Europe Congress Berlin Wednesday 28th May 2008
  2. 2. Session Overview • OSA – an overview • ASDA and Unilever – Theatre and Factory • L’Oreal and dm-drogerie markt • P&G – Winning at the first moment of truth
  3. 3. OSA – an overview Dr Paul Chapman Oxford University Saïd Business School
  4. 4. Saïd Business School Europe’s newest and fastest growing business school. Known for faculty expertise in specialist areas, including retail management. Develops business leaders by providing a complete range of academic activities. Recent executive education clients include: Metro; Sainsbury’s; L’Oréal Conducts research not only into the nature of business, but the connections between business and the wider world.
  5. 5. OSA – An Overview • Status: – OSA remains a key challenge across Europe to fulfilling customers wishes. – Solutions prove elusive or temporary with out-of-stocks quickly returning. • Underlying issue: – Availability is not a simple problem that can be addressed through seeking and implementing ‘best practice’. – OSA cuts across functional and organisational boundaries so needs to be viewed as a “complex problem”. • Way forward: – Few prescriptive answers are available to solve complex problems. Instead a collaborative approach is required to identify and implement specific solutions.
  6. 6. On Collaboration “creating new value together” (Kanter, 1994) “(1) The pooling of appreciations and/or tangible resources, e.g. information, money, labor, etc. (2) by two or more stakeholders (3) to solve a set of problems which neither can solve individually.” (Gray, 1995) “ … collaboration is at the same time the most used, the most frequently misunderstood, the most popular - and the most disappointing strategy that has come along to date.” (Daugherty et al, 2006)
  7. 7. Collaboration requires alignment “creating new value together” (Kanter, 1994) Strategy Strategy Culture Culture Operations Operations “(1) The pooling of appreciations &/or tangible resources, e.g. information, money, labor, etc. (2) by two or more stakeholders (3) to solve a set of problems which neither can solve individually.” (Gray, 1995)
  8. 8. “The pooling of appreciations and/or tangible resources” R S S R Limited to sales Extended across and buying many functions at both organisations Source: after Payne, A., Christopher, M., Clark, M. and Peck, H. (1995) Relationship Marketing for Competitive Advantage. Oxford: Butterworth Heinemann
  9. 9. “creating new value together” S R
  10. 10. “creating new value together” S R 1) Shared goals … 2) … delivered through co-created solutions … 3) … enabled by an intimate understanding of each other’s businesses
  11. 11. Theory into practice, using the ECR Roadmap … Corporate Policy 6. Evaluate 1. Plan 5. Implement 2. Map & Measure 4. Develop Solutions 3. Analyse
  12. 12. Does the ECR Roadmap work?
  13. 13. Session Overview • OSA – an overview • ASDA and Unilever – Theatre and Factory • L’Oreal and dm-drogerie markt • P&G – Winning at the first moment of truth
  14. 14. Asda and Unilever Theatre and Factory Collaboration Saeed Anslow Asda Head of Availability - Retail Rebecca Close Unilever Supply Chain Innovation Manager
  15. 15. Theatre and Factory 2nd Largest Retailer in UK Operate in 23 categories, 342 shops, 26 depots World No. 1 in 7 categories 165,000 colleagues Operate in 150 countries 15 million customers/wk 220,000 employees Lowest Price Supermarket “Live Service, Deliver for 10 years Growth”
  16. 16. ASDA - Approach • Phase 1 (07/08) “Always Different” – Academic support using ECR roadmap – Asda cross functional team – One best way – Short term horizons • Change Office • Dedicated Project Team
  17. 17. ASDA– Opportunities Phase 1 • Separate out factory from theatre • Exploit Wal*Mart innovations • Availability a business priority • Supplier collaboration
  18. 18. ASDA– Solutions (Phase 1 Examples) •On Shelf Customer Availability Measure •New Operating Model - “Trailer to Shelf” – Health & Beauty – General Merchandise – Music Video & Games (MVG) •One Best Way - Implementation
  19. 19. On Shelf Customer Availability (OSCA) • Corporate Epos based measure • Launched April 2008 • Replaces 3rd party measure • Daily availability measure • 70+ Categories
  20. 20. One Best Way – Operating Model H&B, GM
  21. 21. One Best Way – Replenishment Example PRIORITY FILL 22:00 - 06:00 : NIGHT REPLEN COLLEAGUE o Work all delivery directly from blue o Clean, tidy & face-up o Rack away all overstocks by totes o Fill promo ends/sideframes commodity in the BOH o Do not work overstocks o Return overstocks to BOH o Ensure TUC codes on outer packaging face outwards
  22. 22. ASDA - Store Implementation Store Of Learning What a Good Job Looks Like
  23. 23. Evaluation Health & Beauty General Merchandise Stockholding 20% reduction 20% reduction Availability 35% reduction 31% reduction (On Shelf Gaps) OSA +2% +2%
  24. 24. ASDA – Phase 2 (08-10) “Always Brave” • Collaboration • Factory approach • Continuous Improvement • Long term horizons
  25. 25. Asda and Unilever: A Leap of Faith
  26. 26. Unilever - OSA Vision
  27. 27. A relationship that has grown Asda/ Unilever Global Journey UK Journey 40 pilots Project Pocket OSA Improvement > 98% Project Poppy Reduced Inventories Project Sunlight Increased Sales Improved Morale
  28. 28. Phase 2: Asda and Unilever Vision: • Deliver a step change in OSA and improve productivity • Embed changes throughout both businesses • End-to-End Supply Chain optimisation
  29. 29. Asda and Unilever - What? Health & Chilled Ambient Generic Beauty Apr – Jun ‘08 Jul - Aug ‘08 Sep - Dec ‘08 ‘09
  30. 30. Asda and Unilever - How?
  31. 31. “Be Brave” Suppliers Trading Supply Distribution Stores Customer Asda and Unilever Sustainable improvement for the Value Chain
  32. 32. Session Overview • OSA – an overview • ASDA and Unilever – Theatre and Factory • L’Oreal and dm-drogerie markt • P&G – Winning at the first moment of truth
  33. 33. Delivery of make-up wall units LEANER and FITTER logistics concept for cosmetics setting new standards
  34. 34. Content Partners involved in the project Facts and figures Reasons for the project – the challenges Targets Procedure Realization – the impossible became true Results
  35. 35. Involved partners •“Deutscher Handelspreis” for 2007 for excellent image and social engagement •High level position at “Kundenmonitor 2007” as most popular retailer through clear victory with different performance levels •Victory among 19 retailers at “Qualitätsbarometer” of research institute PULS •Ranking-position at retail brands 2007 of the BBDO Consulting; classification as retail brand which provides the highest benefits
  36. 36. Involved partners Turnover 2007: 180 Mio. € Branches: 20 national, 3 international Employees: 1.600 Capacity: 350.000 qm logistics&service area 200 vehicles/trucks A modern and innovative company, multiple awarded Worldwide activities Wide performance range from procurement to production replenishment and all typical logistics outsourcing activities
  37. 37. A multichannel pure player in beauty Channels Brands Professional Food, Drug and Mass Parfumeries and department stores Pharmacies The Body Shop
  38. 38. No.1 in Beauty 17.100 (in millions of euros) 15,790 14,533 + 8.0 % 13,641 + 8.7 % + 6.5 % 2004 2005 2006 2007 7
  39. 39. Facts and Figures 16,100 make-up unit walls in German retail for the brands Maybelline and L’ORÉAL PARIS Of them 1,900 at customer dm-drogerie markt 256 wall unit in 2007 for new stores, re-opening or change at dm
  40. 40. Reasons for the project – the occasional challenges Missed deliveries of one part (products or unit-wall) Support of the store-staff was necessary Damaged, missing and lost products Make-up area partly inaccessible Pick-up of the no longer needed make-up wall in separate step A lot of interfaces and complex communication control and high costs Out of Stocks Lost turnover Inconvenience for consumers and staff
  41. 41. Reasons for the project – the permanent challenges Separate delivery of products and wall unit Installation and replenishment of the wall-unit l in a separate step by a merchandiser Duration 4 – 5 hours Excessive waste material A lot of interfaces and complex communication,control and high costs Inconvenience for consumers and staff
  42. 42. Process overview before re-organisation L‘ORÉAL Forwarder Merchandiser dm-store B Delivery Transport Delivery E Wall unit Wall unit Wall unit F Delivery Transport Delivery O Products Products Products R Coordination Timing Installation, E Merchandising Ressources Replenishment
  43. 43. Targets Reorganisation of the complex supply chain with the objective of being in the right place at the right time and to prevent out of stocks │ Reduction of interfaces and complexity │ No inconvenience for consumers and staff │ Avoidance of loss of sales │ Cost optimization
  44. 44. Procedure Extensive analysis of the behaviour of consumers and staff during installation of a unit wall Process- and cost analysis of the present process- where are the problems and the cost drivers? Clear requirement to the necessary performance of a partner Project team consists of members of the client, the partner, sales, marketing, customer service and logistics During the project phase live tests of different solutions at POS
  45. 45. Realization - Changes │6 services from one hand │Storage │Due date control │Replenishment │Transport to POS │Installation │Reshipment of old unit-wall Reduction of interfaces and workload for communication and control
  46. 46. Realization - Process overview after re-organisation L‘ORÉAL Forwarder Merchandiser dm-store B Delivery Transport Delivery E Wall unit Wall unit Wall unit F Delivery Transport Delivery O Products Products Products R Coordination Timing Installation, E Merchandising Resources Replenishment L‘ORÉAL Hegele dm-store A Delivery control, Storage and completion F Delivery, Delivery Wall unit, Products Replenishment T Packaging Installation E Transport R EDI-DESADV
  47. 47. Realization ready replenished unit wall at Hegele arriving at POS transportation at POS premises unpacking installation
  48. 48. Results Unique in the market Integrated logistics-concept with EDI-DESADV Concentrated transportation No inconvenience for consumers and staff No interruption of sales Reduction of costs by 20% and OOS-level by 50% Roll-Out through customer to his 6 other make-up suppliers in October 2006 Win-Win-Win Situation
  49. 49. Thank you
  50. 50. Session Overview • OSA – an overview • ASDA and Unilever – Theatre and Factory • L’Oreal and dm-drogerie markt • P&G – Winning at the first moment of truth
  51. 51. Context – OSA Linked to Corporate Mission
  52. 52. Progress % of Customer / Category Combinations where out of stocks are greater than 5% 42% 30% FEB 2003 FEB 2008
  53. 53. A Typology of Shelf Out of Stocks Shelf Out of Stocks Un- Information Product not Store planned / Data Supplied Demand Operations Errors % % % % Conventional approach
  54. 54. Where to Start…. Shelf Out of Stocks Un- Information Product not Store planned / Data Supplied Demand Operations Errors Conventional approach Shelf Backwards approach
  55. 55. The improvement process starts from the shelf • Inconsistent demand is a root cause of service level failures • Understanding the process from the shelf backwards identifies how to remove the opportunity for failures • By engaging the right stakeholders from the start, results can be delivered quicker
  56. 56. ECR Road Map Call to Corporate Policy Action! 6. Evaluate 1. Plan 5. Implement 2. Map & Measure 4. Develop Solutions 3. Analyse
  57. 57. Call to Action Lost sales Additional Costs • Store / brand switching • Damaged product • Trade up / regimen • Additional inventory • New stores • Additional labour • Wasted transport • etc Sales opportunity = $ Cost opportunity = $ Scope:
  58. 58. Engage and involve the right stakeholders • Store Operations • Store & Backroom design • Logistics & Distribution • Human Resources & IT • Sales, Marketing & Buying • Loss Prevention • Store Process Improvement / Audit • etc
  59. 59. Learn to see – go on a journey together • Follow products • Identify failure points • Analyse root causes • Brainstorm solutions • Prioritise
  60. 60. Deliver results…. 25% 22% 20% 18% Out of Stock Rate 14% 15% 10% 8% 5% 5% 3% 0% Base Line Create Fix the Joint Root Cause Embed / 2001 Awareness Basics Engagement & Action New Metrics 2002 2004 Planning 2007 2005
  61. 61. Change in P&G scheduling helped lead to same day delivery to store and 1 less days inventory
  62. 62. Clearer labelling on orders for split cases has speeded up checking and reduced errors
  63. 63. Takeaways • OSA needs to be linked to corporate objectives and a joint “size of the prize” agreed • Speed up the improvement rate by starting at the shelf and working backwards • Engage and involve all the right people from the very beginning • Go on the journey together, follow the products back up the supply chain, find and remove opportunities for failure • Establish new metrics to hold the gains
  64. 64. Session Overview • OSA – an overview • ASDA and Unilever – Theatre and Factory • L’Oreal and dm-drogerie markt • P&G – Winning at the first moment of truth
  65. 65. In summary • Status: – OSA remains a key challenge across Europe to fulfilling customers wishes. – Solutions prove elusive or temporary with out-of-stocks quickly returning. • Underlying issue: – Availability is not a simple problem that can be addressed through seeking and implementing ‘best practice’. – OSA cuts across functional and organisational boundaries so needs to be viewed as a “complex problem”. S R • Way forward: – Few prescriptive answers are available to solve complex problems. Instead a collaborative approach is required to identify and implement specific solutions: 1) Shared goals … 2) … delivered through co-created solutions … 3) … enabled by an intimate understanding of each other’s businesses
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