P&G-Metro SC Performance
 Improvement Project




Member of METRO Group
1
METRO in China

                 
                  
                  
                  
                  
          ...
2




                The Cash  Carry business concept
                for professional customers groups

HORECA
TRADER
  ...
3




Current SC Network

SC Network (DFNF) Y2007

• Metro Procurement Logistics (PAXD) network
 built up with 3 cross doc...
4

PG-Metro SC Performance Improvement Project
--Objective




 Overall improved supplier performance and more
 (Metro and...
5

PG-Metro SC Performance Improvement Project
-- Deliverables



                                 Decreased
             ...
6


PG-Metro SC Performance Improvement Project

     Background


    • Metro and PG supply chain jointly agreed that Fil...
7



PG-MetroSupply Chain Supplier Scorecard
 METRO SC Performance Improvement Project
           Project Proposal – Gener...
8

PG-Metro SC Performance Improvement Project
-- Tools- KPIs/ Scorecard Definition

          KPIs                       ...
9

PG-Metro SC Performance Improvement Project
-- Concept and Example
  Scoring Concept
  For the time being the focus of ...
10


PG-Metro SC Performance Improvement Project

      Execution
   • Dedicate one PG Logistics Manager to work with Metr...
11


PG-Metro SC Performance Improvement Project

      Pilot Stores
             100%
              90%
              80%...
12


PG-Metro SC Performance Improvement Project

         Root Cause




 •    During the pilot project period (Jul07), s...
13


PG-Metro SC Performance Improvement Project

         Results
                  50
                  45
             ...
14


FR Improvement Project Phase I Review
-- Fill rate improvement CY2007
               £ ¤ ¥ ¦ § ¨ ©  
           ¢  ¢ ...
15




Contact Details
Metro:
Mr. Denny Yang – Head of SCM
yibing.yang@metro.com.cn
Ms. Jin Lan – Metro China Buyer
Lan.ji...
16




Backup
17
                                                                                                             back


Sup...
18
                                                        back


Supplier KPI / Scorecard
        Supplier      Order Sen...
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P&G China and Metro C&C Supply Chain performance improvement project (by ECR Asia Pacific)

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P&G China and Metro C&C Supply Chain performance improvement project (by ECR Asia Pacific)

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P&G China and Metro C&C Supply Chain performance improvement project (by ECR Asia Pacific)

  1. 1. P&G-Metro SC Performance Improvement Project Member of METRO Group
  2. 2. 1 METRO in China ! # $ # % '( ! )! *
  3. 3. 2 The Cash Carry business concept for professional customers groups HORECA TRADER HORECA TRADER CBU CBU e.g. e.g. e.g. - Small Retailers - Administrations - Hotels - Generalists /Institutions - Restaurants - Specialists - Industry Drug Stores - Caterer - Service companies Petrol Station Shops - Cafes/bars - Freelancer Kiosks - Special food - Authorities sales formats The service level of logistic relating to CFR, OOS, etc. are critical in CC, because the professional shoppers are doing business with CC.
  4. 4. 3 Current SC Network SC Network (DFNF) Y2007 • Metro Procurement Logistics (PAXD) network built up with 3 cross docking centers in Shanghai, Guangzhou, and Beijing, generating 8.1% indirect flow share in Dec 2007. • PG have Regional Distribute Centers in Shanghai (East), Guangzhou (South), Beijing (North), Tianjin (North), Chengdu (Center West) to cover Metro orders.
  5. 5. 4 PG-Metro SC Performance Improvement Project --Objective Overall improved supplier performance and more (Metro and Supplier ‘win-win’)
  6. 6. 5 PG-Metro SC Performance Improvement Project -- Deliverables Decreased Late Delivery Increased Customer Fill Rate Satisfaction PG SC Performance Improvement Increased Improved Sales GP Goods availability
  7. 7. 6 PG-Metro SC Performance Improvement Project Background • Metro and PG supply chain jointly agreed that Fill Rate is a priority KPI opportunity in China given Metro’s rapid growth in the market. • Before the project kick off(Jan07-Jun07), Metro Fill Rate has been 60.3% nationally, that means about 40% of Metro order can not be supported by PG, without having an aligned root cause.
  8. 8. 7 PG-MetroSupply Chain Supplier Scorecard METRO SC Performance Improvement Project Project Proposal – General Working Process Principle: MCC Buyer integrates SC Supplier Score Card in normal operational business process, monitors improves it together with PG. Tracking Sheet is submitted to Metro SCM for monitoring. Contact PROCESS KPI / Scorecard KPI Follow-up KPI / Distribution to with PG, * Implement KPI Scorecard need discuss reasons, Buyer / PG and penalty Developm Creation Impro- define action Analysis process ent vement plan, targets. Monthly Monthly Monthly Monthly Monthly WHEN Alignment Metro SCM Metro SCM Buyer PG Buyer PG Buyer WHO Involve Buyer Involve SCM if Involve SCM if Involve PG needed needed SCM
  9. 9. 8 PG-Metro SC Performance Improvement Project -- Tools- KPIs/ Scorecard Definition KPIs Formula Remark KPI measures the share of articles delivered correctly concerning quantities. Fill Rate % (Ord Qty - Short Qty) / Ord Qty Only short deliveries have a negative influence (no over deliveries). KPI measures the share of articles Lead-time Reliability Late Delivered Qty / Total Delivered Qty delivered late in the concerning period. Too (Late) % early deliveries are not considered. KPI measures the average lead time Avg. Lead-time Goods Receiving Date - Order Generating Date between order and delivery. KPI answers the question, which timeframe Stock Coverage Avg. Daily Stock Qty / Avg. Daily Sales Qty (days) is covered with the actual stock.
  10. 10. 9 PG-Metro SC Performance Improvement Project -- Concept and Example Scoring Concept For the time being the focus of the scoring is on order related KPIs only (Fill Rate, LTR - Too Late Deliveries, Order To Delivery Lead-time) KPIs Weight Limits Scoring Formula Full Score No Points Fill Rate (in % ) 50 100 60 (value - 0.6) *2.5 *weight LTR-Too Late Deliveries (in %) 30 0 40 (0.4- value)*2.5*weight Order To Delivery LT (in days) 20 1 6 ((weight/6)*(1/value)*6 * Value of the KPI Example of Scoring sample report KPIs KPI Value Scoring Score Fill Rate (in % ) 84.7% (84.7%-60%)*2.5*50 30.9 LTR-Too Late Deliveries (in %) 19.7% (40%-19.7%)*2.5*30 15.2 Order To Delivery LT (in days) 3.0 (20/6)*(1/3)*6 6.7 Total Score 52.8
  11. 11. 10 PG-Metro SC Performance Improvement Project Execution • Dedicate one PG Logistics Manager to work with Metro SCM and HQ Buyer/Store Operation to jointly gain a deep understanding of store operation processes. • Developed a set of Hypotheses on the key factors and root causes leading to low FR in each bucket and developed a set of solutions to address the root causes. • The 4 stores (ZB, SZ, TJ, GZ) were selected for the pilot based on the relatively low level of promotion pack Fill Rate, then deploy nationally.
  12. 12. 11 PG-Metro SC Performance Improvement Project Pilot Stores 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Jan07 Feb 07 Mar07 Apr07 May07 Jun07 ZB is in Shanghai ZB CS TJ GZ • The chart above shows Metro FR data for the 4 pilot stores during Jan-Jun07, the average FR is only 60%, TJ store even have 27% FR before.
  13. 13. 12 PG-Metro SC Performance Improvement Project Root Cause • During the pilot project period (Jul07), service defects in the 4 stores significantly declined from 22.35% to 6.3% on “Promotion pack over allotment order”. Highlight has been the “CS store”, which could be reduced to 0 defect rate on “over allotment order”. • Meanwhile, during the pilot period, for open allocation day order, we established a tracking to every store order, no store over inventory amount when placing order, which greatly meet our target.
  14. 14. 13 PG-Metro SC Performance Improvement Project Results 50 45 40 35 30 25 20 15 10 5 0 All All Jul GZ GZ Jul CS CS Jul ZB ZB Jul TJ TJ Jul (Jan- (Jan- (Jan- (Jan- (Jan- Jun) Jun) Jun) Jun) Jun) Over allotment during allocation period Open allotment day • During the pilot project period (Jul07), service defects in the 4 stores significantly declined from 22.35% to 6.3% on “Promotion pack over allotment order”. Highlight has been the “CS store”, which could be reduced to 0 defect rate on “over allotment order”. • Meanwhile, during the pilot period, for open allocation day order, we established a tracking to every store order, no store over inventory amount when placing order, which greatly meet our target.
  15. 15. 14 FR Improvement Project Phase I Review -- Fill rate improvement CY2007 £ ¤ ¥ ¦ § ¨ © ¢  ¢  ¢  ¢  ¡¢  ¢  ¢  ¢  ¢  ¡¢                      ¡ ¡ ¡ ¡ ¡ ¡ ¡ ¡ 6 6 1 ' # 4 0 $ % #! ! )0 % % 5 23 ( CB D 78 A 9@ 8 @G H8 EF FR improved from previous 60%(Jan-Jul 07 average) vs current 76%(Aug07-Feb08 average), 16% improvement already. Promotion pack unfilled rate decrease 50% after process implement. In Feb08, we got historical high FR data as 82%. FR project was successfully put in Global MM and PG joint 2007 annual report as the first China supply chain golden case.
  16. 16. 15 Contact Details Metro: Mr. Denny Yang – Head of SCM yibing.yang@metro.com.cn Ms. Jin Lan – Metro China Buyer Lan.jin@metro.com.cn Mr. Xu Bin –Flow and Demand Manager of SCM bin.xu@metro.com.cn Ms. Nellie Wu – SCM Assistant huifang.wu@metro.com.cn PG: Ms. Terry Tang – Metro Team CBD AD Tang.te@pg.com Ms. Kim Kehoe – PG Customer Logistic AD Kehoe.ks@pg.com Ms. Grace Li – Metro Team logistic manager li.gr@pg.com Mr. Philip Cai – Metro Team Category Management Account Executive cai.qi@pg.com
  17. 17. 16 Backup
  18. 18. 17 back Supplier KPI / Scorecard Supplier Order quantity GR quantity Over Short ABC delivery delivery Art. 1 100 120 20 0 Art. 2 110 80 0 30 Art. 3 100 0 0 100 Sum 310 200 20 130 Fill Rate shortfall% = (Ord Qty - Short Qty) / Ord Qty (over delivery excluded) Fill Rate shortfall% : (310-130)/310 = 58.1% Supplier Order Planned GR-Date GR- GR (excluding Late ABC Qty Delivery Date quantity over delivered Delivered Qty) Qty Art. 1 100 15.07.05 15.07.05 120 100 0 Art. 2 100 15.07.05 14.07.05 100 100 0 Art. 6 100 21.07.05 22.07.05 40 40 40 Sum 240 40 Leadtime Reliability Late% = Late Delivered Qty / Total Delivered Qty (over delivery excluded) Leadtime Reliability Late% : 40/240 = 16.7%
  19. 19. 18 back Supplier KPI / Scorecard Supplier Order Sending Goods Lead ABC Date receiving Date Time Order line 1 01.03.2006 05.03.2006 4 days Order line 2 08.03.2006 15.03.2006 7 days Order line 3 21.03.2006 27.03.2006 6 days Lead-time = Goods Receiving Date - Order Generating Average Lead Time in Days = (4+7+6)/3 = 5.6 Supplier Avg. Stock in Avg. Sales in ABC MU MU Art. 1 50 2 Art. 2 50 3 Art. 3 100 5 Stock coverage = Avg. Stock in MU / Avg. Stock coverage = 200/10 = 20 days
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