New World


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New World

  1. 1. A New World Optimization of Our Supply Chain Paul Jovian, Senior Vice President – Supply Chain RONA 2010 Investor Day January 25, 2010
  2. 2. Agenda Supply Chain Network 2009 Achievements 2010-2011 New World Program Demand Planning and Replenishment Operations Supply Chain Optimization Transportation Optimization 2
  3. 3. Supply Chain Network 3
  4. 4. Supply Chain Network (Canada) 9 Distribution Centres Over 2.3 million square feet British Columbia Hopewell 171,000 s.f. Alberta Surrey Quebec 85,000 s.f. Boucherville 926,000 s.f. Ontario St-Hyacinthe Edmonton 100,000 s.f. 185,000 s.f. Calgary 104,000 s.f. Calgary 326,000 s.f. Terrebonne Halton Hills 380,000 s.f. 45,000 s.f.
  5. 5. Supply Chain Network Asia (Import) RONA uses service providers for storage, oceanic transport management and container clearance We have storage capacity in 9 Asian ports Sample of import container routing from China to Canada 5
  6. 6. Supply Chain Role and Approach Plan, Replenish and Deliver the right product, in sufficient quantity, at the proper locations Use best-of-breeds Supply Chain System 6
  7. 7. 2009 Achievements 7
  8. 8. 2009 Achievements 1. Forecast Accuracy Improved by 125 basis points 2. Service Level Service Level improved by 180 basis points 3. Inventories Average inventory reduced by $54M Turns improved by more than 2% 4. Supply Chain Operation Costs PEP Program $8M savings in Distribution & transport costs Distribution Centres productivity improved by 4% 8
  9. 9. 2010-2011 New World Program 9
  10. 10. 2010-2011 New World Program 3 key elements 1. Demand Planning & Replenishment Operations 2. Supply Chain Optimization 3. Transportation Optimization 10
  11. 11. 2010-2011 New World Program 1. Demand Planning & Replenishment Operations Supply Chain Optimization Program Roll-out 100,000 skus on the new forecasting system Optimize profitability deploying Merchandising Plan system Implement automated centralized replenishment system Convert decentralized western stores to centralized replenishment system Vendor performance Measure, track and manage with new tool Add up to 2000 more skus to the Calgary DC Manage slow moving inventories down another $40M 11
  12. 12. 2010-2011 New World Program 2. Supply Chain Optimization Use the Activity Base Costing Module to select the best channel to service each store-sku combination Divert up to $40M of shipments to the ship direct channel Increase the flow-through and cross-dock volume in our Terrebonne facility in Quebec by 10% Improve productivity at Distribution Centres Implement the labour variable standard module along with a location- optimized module within the warehouse management system 12
  13. 13. 2010-2011 New World Program 3. Transportation Optimization As energy cost continues to rise rapidly, the need to optimize our transportation network is essential Implement a transportation management system (TMS) Convert Vendor from pre-paid freight terms to collect terms Conversion is a multi-year program but will be facilitated by the implementation of the TMS Optimize the inbound and outbound transportation delivery Expect a relative reduction of 3% - 7% in transportation expense 13
  14. 14. Conclusion We are well positioned for 2010-2011 New World Program Our supply chain program will continue to improve the service level to the stores yielding a better in- stock position while increasing turns. Distribution productivity is increasing and we have new capabilities coming on stream in 2010-2011 to support future improvements. Transportation expenses will be a challenge and an important focus. 14
  15. 15. Questions? RONA 2010 Investor Day January 25, 2010