Supply Chain Conference 2010 Executive Summary


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Supply Chain Conference 2010 Executive Summary

  1. 1. ExEcutivE Summary 12th – 14th October 2010 • Berlin,
  2. 2. WHat iS tHE CONSumEr GOODS FOrum?the Consumer Goods Forum (CGF) is a global, parity-based industry network, driven by its members. it brings together the CEOs andsenior management of over 650 retailers, manufacturers, service providers and other stakeholders across 70 countries and reflects thediversity of the industry in geography, size, product category and format. Forum member companies have combined sales of Eur 2.1trillion.the Forum was created in June 2009 by the merger of CiES - the Food Business Forum, the Global Commerce initiative (GCi) and theGlobal CEO Forum. the Consumer Goods Forum is governed by its Board of Directors, which includes 50 manufacturer and retailer CEOsand Chairmen.the Forum provides a unique global platform for knowledge exchange and initiatives around five strategic priorities – Emerging trends,Sustainability, Safety & Health, Operational Excellence / New Ways of Working together and Knowledge Sharing & People Development– which are central to the advancement of today’s consumer goods industry.the Forum’s vision is: “Better lives through better business”. to fulfil this, its members have given the Forum a mandate to developcommon positions on key strategic and operational issues affecting the consumer goods business, with a strong focus on non-competitiveprocess improvement. the Forum’s success is driven by the active participation of the key players in the sector, who together developand lead the implementation of best practices along the value chain.With its headquarters in Paris and its regional offices in Washington, D.C., and tokyo, the CGF serves its members throughout theworld.For more information, please visit www.theconsumergoodsforum.comWHat iS tHE SuPPLy CHaiN CONFErENCE?the Supply Chain Conference is the meeting place for Supply Chain & Logistics executives in the retail and consumer goods industry.the objective is to anticipate future trends and challenges, share practical experiences, including benefits found and lessons learned.Participants have many opportunities to network and exchange views on the top-of-mind issues that are discussed during theconference. 2 Supply Chain Conference 2010 - ExECutivE Summary
  3. 3. the Supply chain CommitteeDelighting the Consumer. acting as One.► TONY VENDRIG, Executive vice President Business ► KERRY McNAIR, Director, Global Supply Chain, WalmartDevelopment, aHOLD EurOPE, the Netherlands Group, tHE COCa-COLa COmPaNy, uSa(Committee Co-Chairman) ► ANDREAS MÜNCH, member of the Executive Board, Head of► JOHN S. PHILLIPS, vice President, Customer Supply Chain & Department Logistics & it, miGrOS, SwitzerlandLogistics, PEPSiCO, uSa ► STEFANO PIETRONI, Network Design Planning & Sourcing(Committee Co-Chairman) Director, BariLLa, italy► PETRA ALBUSCHUS, Senior vice President Logistics, iCa ► JIM RADIN, vice President – Global Supply Chain Operations,Sverige aB, Sweden mC COrmiCK & CO., iNC., uSa► MARK AYLWIN, managing Director – BOOKEr DirECt, ► GERHARD ROUX, Group Chief information Officer/ Supplyunited Kingdom Chain, tHE Dairy Farm, Singapore► TONY BORG, vice President - Head of Corporate Supply ► JOZE SADAR, Senior Executive Director, CategoryChain, NEStLÉ GrOuP, Switzerland management, Logistics and internal Production, mercator► RICK CICCONE, Chief Supply Chain Officer / integrated Supply Operations Slovenia, mErCatOr GrOuP, SloveniaChain, mC CaiN FOODS, uSa ► NUNO SERENO, Supply Chain Director, JErONimO martiNS,► KEVIN DOUGHERTY, Group vice President, Chief Supply Chain PortugalOfficer, tHE KrOGEr CO., uSa ► YANNIS SKOUFALOS, vice President Product Supply Global► MARTIN GLEISS, Supply Chain & Logistics manager, SPar, Operations, PrOCtEr & GamBLE, uSaaustria ► ANTOINE VANLAEYS, Supply Chain Director, L’Oréal► DIRK HOLBACH, Global Supply Chain Operations, Laundry and Consumer Product Division, L’OrÉaL, FranceHome Care, HENKEL KGaa, Germany ► MICHAEL WHITING, Director, Global Strategic Operations,► TAKAO IWAMOTO, President, ÆON Global SCm Co. Ltd., JOHNSON & JOHNSON, uSaJapan► SHARON JESKE, Director, Operational Excellence, tHE Special Advisors to the CommitteeCONSumEr GOODS FOrum ► VALENTIN ELISTRATOV, vice President Business Development► GREG KETCHUM, Senior vice President, Global Supply Chain international Supply Chain, EmEa, DHL ExEL, GermanyStrategy, KELLOGG COmPaNy, uSa ► JACKY GERVIS, Co-Chief Executive Officer, Fm Logistic,► LUC KOENOT, Senior vice President Supply Chain & it, FranceDELHaiZE GrOuP, Belgium► HERBERT KUENG, Director Customer Service & LogisticsCEEma, KraFt FOODS iNtErNatiONaL, austria Supply Chain Conference 2010 - ExECutivE Summary 3
  4. 4. tuesday 12 October rdStore tour Programme kindly sponsored by4 Supply Chain Conference 2010 - ExECutivE Summary Supply Chain Conference 2010 - ExECutivE Summary
  5. 5. Participants were warmly welcomed by Supply Chain Conference 2010 - ExECutivE Summary 5
  6. 6. Wednesday 13 October rdWelcome to the Supply ChainConference 2010Tony Vendrig, Executive vice President, BusinessDevelopment, ahold Europe, the Netherlands andCo-Chairman of the Supply Chain CommitteeJohn S. Phillips, vice President, Customer SupplyChain & Logistics, PepsiCo, uSa & Co-Chairman of theSupply Chain CommitteeO pening the conference, tony vendrig welcomed 190 participants from 28 countries to Berlin. Some 42% of participants were retailers and 15% were manufacturers.vendrig said the conference was a unique opportunity for“learning best practices and expanding our knowledge base”. Headded that it was valuable to “get a feel for what your colleaguesare facing”.What’s New about your association?Jean-Marc Saubade, managing Director, the Consumer Goods Forum t he Consumer Goods Forum is work accessible to all companies, for the good of the industry. “We not “one more association” work on things that can only happen when we unite,” Saubade but rather, the vehicle through underlined. these include, among others, food safety, sustainable which the industry can finally speak packaging and carbon measurement, stripping cost from the in one voice. Launched in June 2009, supply chain and information sharing and are arranged under five in New york, with the fusion of CiES strategic pillars: –the Food Business Forum with the 1. Emerging trends Global Commerce initiative and the Global CEO Forum, the body aims to 2. Sustainability drive unified collaborative action on 3. Safety & Health non-competitive issues. “the CEOs of 4. Operational Excellence / New Ways of Working together your companies were sitting on too 5. Knowledge Sharing & People Development many boards and going to too manymeetings, in which they were talking about the same things,” the Forum is not a lobby but nonetheless aligns itself strategicallySaubade explained. “at the same time, the industry is not talking with lobbying groups in the regions, such as Gma, Fmi, Errt,in one voice. We are not in the driving seat.” EuroCommerce and so on. “We still need to influence legislation in various countries,” Saubade asserted. the connection in thethe Consumer Goods Forum members have combined sales of Eur regions is made via local Efficient Consumer response (ECr)2.1 trillion: an organisation with enormous collective influence. groups. the Forum also aligns with GS1: global projects needthe board of directors brings together the CEOs and chairmen of global standards. the idea is to avoid duplication and pursue a25 retailers and 25 manufacturers. the board positions cannot be single industry agenda.delegated, so the decisions are made by the people who can “reallyget things done”. Driven by its vision of “Better Lives throughBetter Business,” the Forum has a mandate to make collaborative 6 Supply Chain Conference 2010 - ExECutivE Summary
  7. 7. Back to Basics – the German MarketWelcome to GermanyJörg Pretzel, CEO, GS1 GermanyG S1 Germany took an audit on emerging legislation has been passed enforcing compliance in trends in the German market in 2006 and sustainability, energy efficiency and emissions, use of used the findings to create a roadmap. renewable energies, consumer health, data protectionmegatrends include demographic shifts (today and track and trace. Global requirements along the20% of the population is over 65; by 2060 same lines will lead to new targets for all involvedit will be 30%), globalisation and ecological parties. Sustainable logistics will have an important roledevelopments. among the more focused trends to play and cooperative logistics solutions are centralis the explosion of mobile internet technology, to success, such as share use of infrastructure and thedriving new consumer mindset. there is increasing bundling of goods. increased urbanisation throws upuse of price comparison software in store, for logistics challenges. “City hubs are needed,” Pretzelexample. a multi-channel offer is expected, with says. “you can’t drive a 7 ton truck into the city.”a single seamless brand experience. Consumers GS1 holds that is only possible toare asking for price, quality, health and wellness, meet these challenges by taking asustainability, virtual and extended information and collaborative approach between retailerssupport for mobile technologies. the challenge is to and manufacturers; it endorses thefind the right balance between cost-efficiency and ECr approach to collaborative processthese shopper expectations. is also enabling a more collaborative approachto data exchange, organisation and processes. in Germany,Challenges of the German retail Landscape by metro Cash & CarryArnd Riehl, Chief Operations Director, metro Cash & Carry Deutschland GmbH, Germanym etro Cash & Carry accounts for 50% of metro Group’s revising its space allocation to achieve the right ratio of food, business. the German market is saturated with retail non-food, fresh and dry; it has optimised strategic and destination space and characterised by fierce competition. there is departments and improved customer flow. When it came toconstant downward price pressure”, driven by the discount sector. assortment, metro intensified its focus on “destination categories”Consumer behaviour has changed: there is declining customer to strengthen the uSP: a concentration on freshness and quality,loyalty, “hybrid behaviour” (e.g. high-low shopping), a “spend- mass merchandising and innovation. it targeted its core Hotel,now” mentality. this is coupled with increased mobility and a restaurant and Café customer group with an augmented rangetransparent marketplace due to the availability of comparative of private label products, under the Horeca Select brand and price information on the internet. introduced some SKus under the premium private label brand Fine metro Cash & Carry’s reaction to Food Finestro. to attract new customers it introduced innovative these market changes has been to “go new products to the assortment, such as gourmet meats by region back to basics”. the company has been and strengthened the own brand offer via promotions. Own brand restructured to focus on: assortment, share increased by 2% within a year. customer orientation, stores and to better cater to Hotel, restaurant & Café customers’ need service. the company is investing Eur for convenience, a drive in concept was developed. Customer 100 million in the modernisation of order goods by phone or e-mail and collect them at the drive-in all its stores. Since 2005 it has been location. metro is also working on a new fresh fish platform for Q4 2010: run and organised by metro, the platform will incorporate a modern logistics hub in Frankfurt and eliminate third-party vendors, leading to 48-hour reduction in lead times and improved quality. But with Hotel restaurant & Café customers it is not enough to sell food. metro offers a complete service including shop fits, consultancy and finance. Supply Chain Conference 2010 - ExECutivE Summary 7
  8. 8. Back to Basics – On-shelf availabilityFresh at albert Heijn: an integrated Customer-Driven replenishmentand ProductionPeter van Kralingen, vice President replenishment, albert Heijn, the NetherlandsN ine out of the ten most-scanned products at ahold banner create a demand forecast (the more albert Heijn are from the fresh category. “Our customers years you run the software the more come for fresh,” Peter van Kralingen says. “if the fresh is not comparative data there is, henceavailable we will lose our customer.” in fresh, albert Heijn works self-learning). Central replenishmentone-to-one with dedicated suppliers in a long-term commitment. integrates this with actual storealbert Heijn operates 835 outlets across five formats. it serves orders and checks against KPis. it thenthem with 13 million cases a week via an integrated, centralised feeds the data on to the warehouseordering system, in which POS data drive just-in-time deliveries management system (WmS), whichand allow low stock levels. there are three national warehouses for generates an inventory report. thechilled and ambient and four regional combination warehouses. complete set of data thenLead times range between nine to 18 hours: “We can react on flows to the supplier’scustomer behaviour within nine hours,” Kralingen confirms. Shelf ErP system to driveavailability and store appearance are the KPis. it was necessary to production. the variables,move to a centralised system to remove complexity from stores. such as weather, are“We want to make it easy, to take work out and let the store critical comparingfocus on the customer.” that means conducting the entire supply perceived demandchain from shelf back to supplier. the replenishment process at generated by POS againstHQ is therefore entirely responsible for product availability and forecast demand and modified accordingly: “When it’s 25 degreesappearance in stores. outside, you need lots of Coca-Cola, not so much sauerkraut.” Kralingen emphasises that it’s a team effort: “Consumer behaviourthe “self-learning” system takes POS data from stores and is the starting point in our thinking, processes and integratedintegrates it with other indicators such as seasons, events, systems. together with our suppliers, we make it happen.”promotions, weather forecasts and historic demand patterns toinformation Substitutes Stock -the Parfümerie Douglas’ Way of SupplyChain managementJörg Strüning, Head of Organization, Parfümerie Douglas GmbH, Germany D ouglas is a decentralised group need to comply with approved use of order channels (via EDi) and of 1,220 stores in 22 countries. bundle orders at the specified times. the 3PLs must have a flexible the company values the regional employee deployment, offer synergies in deliveries and use of autonomy that decentralisation brings logistical floor space and provide excellent handling of high-value/ to store managers, but direct store sensitive products. it is essential to link EDi processes, including delivery (DSD) and manual buying the use of SSCC (NvE in Germany) barcodes, with suppliers to at store level was adding cost and reduce manual data recording and duplication of effort, to ensure complexity. the company wanted rapid data exchange. more than 90% of transactions are already to remove DSD, but did not want being handled by EDi. Orders for 91 of Douglas’ largest suppliers to manage a central (88% of orders) go via EDi (SaF Superstore), with e-mail used warehouse, which was for smaller suppliers that are not yet EDi compliant. 69 suppliers considered a misfit provide EDi invoices (85% of all invoices). implementation for a decentralised of SaF Superstore brought sustainable inventory reduction group. the solution while cutting out-of-stock rates. the use of SaF Superstore for was integrated cross purchasing requires joint action from all the industry partners: docking, managed via “Close contact with ECr was very important to make the whole the company intranet. process a success.” For partners, the process brought the followingunder this model, store deliveries are always handled by cross benefits: improved top seller availability, increased sales in topdocking. imports and private brands are handled using their own seller segment, reduction of returns, bundling effects, optimisedwarehouses and can then either pass through cross docking or capacity planning and preventing serious demand fluctuations.go direct. Efficient handling of cross docking however, places Douglas’ logistics strategy won two awards: the 2006 GS1-ECrstringent requirements on all partners. Suppliers need excellent award and the 2009 GS1 Corporate award, in recognition of itsproduct availability and delivery reliability. they must also be systematic development of the ECr approach.compliant with the cross docking delivery terms. Douglas stores 8 Supply Chain Conference 2010 - ExECutivE Summary
  9. 9. Back to Basics – Sustainable TransportationNational transportation OptimizationThomas Paroubek, SCm -Coordinator of m-industry-Group, migros, Switzerlandm igros is a Swiss retailer and manufacturer. it faced and delivery time slots, national transport optimisation for all increased prices pressure from national competition players, procurement, procurement transports organised by and competition from neighbouring countries. a general migros (factory gate pricing), increase of 5-10% in capacity,increase in transportation costs due to rising taxes put additional optimisation direct/transit (train for longer distances),reductionstrain on the business. the company set an objective, therefore, to in delivery frequency and renegotiation of cargo contracts.reduce national transportation costs by 10% or CHF 40 million. an 4. Commitment: savings verified with all parties, principlesinternal team was set up in collaboration with a third jointly established, agreed and signed. a signatureparty, to implement a five-point process: helps to achieve a higher level of commitment. this, 1. as-is analysis: all movement data was recorded however, requires a critical mass of signatories. for one year, giving certainty when calculating 5. Control: measuring, reporting of savings. savings. “When you have facts and data, you can “Because of the constant controlling, transport argue against the ‘we have always done it like this’ optimisation always remained on the agenda.” mentality.” the move brought annual savings of CHF 45 million, 2. Outline concept: all possible savings measures above the 10% target. However measures alone will were scoped at this early stage and a number of not ensure success. Success factors scenarios were submitted to the management board. include: senior management buy-in, “Political discussions came into the equation,” reliable basis for figures and simplicity Paroubek admitted. of measures, communication and 3. Detailed concept: Nine concrete measures permanent involvement of all the were proposed: optimisation of distribution transports, parties. optimisation of migros/3PL trucks, adaptation of supplySustainable transport at DelhaizeTanguy t’Serstevens, vice President retail Support Services Supply Chain, Delhaize Group, BelgiumD elhaize Belgium handles 85% of its logistics itself, delivering lower emissions than diesel or gasoline, along with a 50-75% noise 1.2 million cases a day to 800 stores. the logistics network is reduction and an rOi in five years. another key project has been to characterised by a high level of centralisation (exceptions are transfer the silent technology to the DC environment.fresh bread, Coca -Cola and newspapers). the challenge meanwhile, GPS trailer locators are used to see thethe company faced was twofold: firstly, it needed to evolve location of any truck in real time, across Europe. Partits logistics operation to handle smaller stores with a of the same system is a temperature monitoringsmaller drop size, handle shorter expiry dates and reverse functionality which generates a warning if the coldlogistics. Secondly, it wanted to address carbon footprint, chain is ruptured and shows where the rupturewaste and recycling. Some years prior, it had introduced occurred. a fuel meter generates and alarm in casea semi-automated warehouse for non-food and Health of fuel theft and door sensors detect and reportBeauty Care, voice picking in all its traditional warehouses back if the trailer is opened outside a warehouseand started using rFiD tracking on crates. Now Delhaize or store: key moves in detecting fraud. the “bluehas deployed a semi-automated warehouse box” system is being rollout out to fresh in 2011for “ultra fresh” products, using rainwater and to dry in 2012.harvesting and solar power. Dock scheduling has brought a better DC workload,in transport, double deck trailers increased helping resource forecasts and bringing download capacity by 60% and took trucks off the waiting times, while missions are managed by aroad. the trailers, with adjustable floors, allow GPS board computer. Drivers must accept missionsDelhaize to maintain different temperatures and register them as completed. Delhaize can seein each section. the rOi came in less than in real time who is available and in which location. this allowstwo years and these are now being rolled out. Noise is also an issue. geofencing and central dispatching: “a very controlled and efficient“it is more and more difficult to get the authority to deliver at night,” process”. the future promises a far more optimised approach tot’Serstevens said. However, the research institute of the Dutch transport in Europe. the current model of truck-only direct linearministry of Economic affairs, SenetrNovem, has a noise reduction flows with partial loads will be replaced by a circular “milk run” inproject and certification scheme called Piek. through this, Delhaize which both deliver and bring back. Flow consolidation will allow upwas able to deploy “silent” technologies, achieve certification and to four suppliers in the same trailer and maximise load.obtain the necessary authorisation to make urban deliveries atnight. a move to compressed natural gas as a fuel produces far Supply Chain Conference 2010 - ExECutivE Summary 9
  10. 10. Networking at Supply Chain Conference 201010 Supply Chain Conference 2010 - ExECutivE Summary Supply Chain Conference 2010 - ExECutivE Summary
  11. 11. Supply Chain Conference 2010 - ExECutivE Summary 11
  12. 12. Practical Ways in turkey to minimize transportation Costsfrom DC to StoresOsman Dogrucu, Distribution Director, tescoKipa, turkey t escoKipa in turkey supplies 45 3. Faster deliveries. hypermarkets and 76 Express 4. Less fragmentation. stores via a single DC in izmir, a port on the aegean coast. Even the first being a function of the second, tescoKipa is using though the stores are concentrated in insulation blankets to maintain varying temperatures within the Western turkey, this still means long same vehicle, allowing it to consolidate fills. it has also moved to journeys to supply stores up to 962 km double decker trucks, allowing 20% more fill. away. transportation is, then, a huge the company could achieve greater business continuity, higher cost and challenge for the growing service and more stable costs by using its own fleet exclusively. business. adding However, it is hard to source funding for such an investment in to the brew are times of financial crisis. it would also force tescoKipa to bear the high fuel prices costs of down time. using third party logistics providers (3PL) – “We use the exclusively would take away these risks but add others, such as most expensive the risk of 3PL bankruptcy, less visibility on root causes of cost fuel in the world.” and lower service quality. the breakthrough solution? use both, tr a n s p o r t a t i o n with a 60-40 split in favour of wholly-owned. using a number costs are unstable of 3PLs will distribute the risk. this solution maximises the gains in turkey and from both approaches while minimising the disadvantages. themany drivers are unqualified. Equally important is the impact of mixed transport approach saved tescoKipa uSD 195,000 in 2009.transportation on CO2 emissions. tescoKipa has set itself the goal the move has brought shorter delivery times, more fleet capacity,of becoming carbon neutral by 2050 and reducing emissions per shorter driver hours, a flexible delivery schedule, cheaper fuelcase delivered by 50% before 2012. to do this, the company is prices, less vehicle maintenance costs, stable Km prices and afollowing a rule called 4F: stable own driver cost. the whole 4F plan brought total savings 1. Less fuel. of uSD 768,000 in 2009. a second DC in istanbul and a third in ankara are being considered. 2. more fill.Sustainable urban Delivery and yamato’s Focus on the Last CentimetreKatsuhiko Umetsu, account Executive, Business Development/Global Customer Solutions, yamato transportCo., Japant he yamato transport Company in Japan moves 3.8 parcels a in step: “yamato covers all over Japan like capillary vessels,” umetsu day. it strives for ultimate customer satisfaction by focusing says. the company delivers 1.3 billion parcels and operates 6,293 on the “last one centimetre” of a parcel’s journey from sender delivery centres and 260,920 collection agents. Customers canto recipient. its business model is based on the conviction that drop off a parcel almost wherever theyhigh quality service as a starting point will drive volume; volume like, so widespread are the collectionwill drive density of operation, leading to profitability, which can points. However, despite its volumebe reinvested in service quality. Service quality manifest as: increases, yamato has set itself tough emissions targets. Some of the ways 1. Customers choose their own delivery time from six two-hour it has set about reducing emissions is windows per day. to dispatch parcels by foot, by bike, 2. in the event of absence, customers call their driver directly by bus and subway. “Our employees to arrange a re-delivery. yamato offers a quick response and get healthy,” umetsu explained. and, no-fee holding. about that last 3. Focus on “personal delivery” rather than home delivery. centimetre: “We are not merelyas a result, yamato was ranked 8th overall among high quality delivering aservice companies by a Japanese ministry of Economy, trade & parcel to anindustry consumer survey, just below amazon. it ranked third for address. We are“perceived quality” and second for “customer expectation”. this bringing a touchsatisfaction, umetsu maintains, is driving volume growth, up from to a person.”34.6% year on year in 2005 to 38.7% in 2009. Density is increasing 12 Supply Chain Conference 2010 - ExECutivE Summary
  13. 13. the Future Value Chaininsights into the Future value Chain 2020Nigel Bagley, Director, industry affairs, unilever, united Kingdomt he Future value Chain was launched in 2006, to “get 1. increased urbanisation: new approaches to 30 to 40 people in a room to explore trends”. Nigel logistics and store formats are needed. Bagley describes it as “self-driven, not a consultant 2. aging population: older people have differentreport”. the project, facilitated by consultancy firm needs – more single-person households requireCapgemini, focuses on creating a ten-year vision of the a rethink on pack sizes.future, updated every two years. thus 2006 brought the2016 value Chain and subsequent reports have produced 3. increased consumer technology: Bagleythe 2018 and 2020 value Chains. the 2016 project focused on the opportunities for brand-retailerthrew up three areas for work: the collaboration around Qr codes, a barcode-likefuture supply chain, the sharing of format, which can be scanned by consumers’business information and data via smart phones to reveal much richer data thanGS1 standards and “New Ways of the uPC/EaN, such as traceability information,Working together” – a roadmap for brand-building promotions and so on.implementing collaborative work. 4. the rising cost of carbon fuel: what does thisBagley says that boards engaged mean when the average uS consumer drives 20with the 2016 report and used the miles to a store and 20 miles back?Future value Chain to drive theiragenda. By 2010, the programme had evolved into a process for Bagley said four global industry strategic objectives had been“building strategies for a new decade”. the identification of trends agreed via the programme: make our business more sustainable,leads to the setting of objectives, which demand the development optimise a shared supply chain, engage with technology enabledof tactics. Emerging trends highlighted as coming from the consumers and serve the health & wellbeing of consumers. “Weprogram include: are comfortable that the Consumer Goods Forum has a range of projects in place to help deliver on these,” Bagley said. He added that manufacturers and retailers “need to fully support the industry programmes that are underway globally, regionally and locally”.conference ModeratorsPetra Albuschus, Senior vice President Logistics, Luc Koenot, Senior vice President Supply Chain & it,iCa Sverige aB, Sweden Delhaize Group, Belgium Supply Chain Conference 2010 - ExECutivE Summary 13
  14. 14. Networking Dinner14 Supply Chain Conference 2010 - ExECutivE Summary
  15. 15. Supply Chain Conference 2010 - ExECutivE Summary 15
  16. 16. thursday 14 October thBack to Basics – Supply Chain EfficiencySupply Chain Efficiency means investing in accuracy and trustMarko Cedilnik, Executive Director of Logistics, mercator, SloveniaRok, Gajšek, Logistics Project manager, mercator, SloveniaSrečko Bukovec, Director of Projects, mercator Operations Slovenia, mercator, Sloveniat hrowing money at problems is not working. the way to evolve if not, the picker will have to correct the mistake. the sticker, is to re-engineer basic processes. this requires an investment therefore, becomes “a symbol of proven accuracy”. that means in trust, the team from mercator argue. People will trust when managers see it, they can trust it. the process convincedwhat they can understand, which means the best solutions are store managers to omit the double check and free up their staffthe simplest ones. mercator set an objective to raise the accuracy time. it also eliminated the human error factor, both at the DClevel of goods control. Store managers had not been confident and the store. as a result, more than 500 full time employees havein the delivery process and were double checking each order been able to focus their attention on customers instead of thereceived, taking up labour time. the solution was to use “end back room.control with scales”, or EaN scan followed byweight control.this means you need to know the weight ofeach SKu in the warehouse, along with thetare weights of the roll cages used. But oncethis data is known, the weight of each SKu islinked to its EaN. this allows the system tocalculate the weight of an order in advance.When goods are picked and loaded onto a rollcontainer at the DC, the picker will weigh thecompleted order. if the calculated weightand the actual weight match then a barcodesticker is generated and the order can proceed. Marko Cedilnik, Executive Rok, Gajšek, Logistics Srečko Bukovec, Director Director of Logistics, Project manager, mercator, of Projects, mercator mercator, Slovenia Slovenia Operations Slovenia, mercator, Slovenia 16 Supply Chain Conference 2010 - ExECutivE Summary
  17. 17. Supply Chain Efficiency at Food DiscountersMirko Warschun, Partner, Head of Consumer industries & retail Practice DaCH, a.t. Kearney GmbH, Germanyt he noted efficiency of discounters’ supply chains is driven and keeps labour costs minimal. the by both the structural and non-structural advantages of high density of the store network the format. Structural advantages include a tightly focused also means that shorter distances areassortment and a large number of highly standardised outlets, required for replenishment. that storeleading to a high-density network that is easy to supply. On the layouts are standardised worldwidenon-structural side, shelf-ready packing (shelf-ready packing at allows for efficient replenishmentdiscounters is close to 100% versus around 37% in non-discount) logistics; indeed the layout is drivenleads to efficient and cost-effective replenishment. Separate by the needs of efficient logistics andpresentation costs around 2.5-3% of net sales, while shelf-ready not the reverse.packing brings this down to 1.5-2%. On-pallet display reduces this However, the boundariesto 0.8-1%. a consistent “no-frills” approach, smart innovations between discount andand focused investment in the supply chain add into these. the “non-discount” retailerslimited number of SKus makes for very high productivity and are now blurring, asstock turn. aldi Süd, for example, has a sales density of Eur 9,964 both sides learn fromper square metre, compared to Eur 3,722 at an average sized and mimic each other.supermarket (1,500 square metres). this is by far the strongest For example, more anddriver of efficiency from a supply chain perspective: the discounter more traditional grocersbenefits from a lower production cost and higher buying power are practicing SKu rationalisation, increasing the share of privateper SKu, due to scale. there is a higher likelihood of full truckloads label in the assortment, focusing on low price and adoptingwith this model and more use is made of cross docking, leading channel-specific logistics. meanwhile discounters are addingto less complexity for storage and warehouse management. the brand names, extending their ranges and spending more ondiscounter also achieves higher labour productivity by flexible marketing. Warschun warns that both sides should avoid blurringroles in store and efficient stocking methods. there is higher space the line too far, since each model has a differential advantageproductivity due to the high stock turn, meaning less backroom with is required. this strips cost from the replenishment processPaltac’s Five-Nine (99.999%) Logistics Service LevelToshiyuki Sakai, Executive Director, Chief information & Logistics Officer, Paltac Corporation, Japan J apanese wholesaler Paltac moves Health Beauty Care and Over the Counter pharmacy products taKEaWayS across Japan via 15 regional DCs, supplying 4,000 drugstores and convenience stores and provides 1. the technologies and processes to create the Future in-store merchandising solutions. value Chain already exist. toshiyuki Sakai said that Japanese wholesalers were specialists in 2. regional differences created local knowledge that handling multiple formats, can be shared and used to create future business in creating services models. customised to individual 3. High service levels create new business opportunities stores and in shared and cost is not always the critical factor. services. Paltac eliminated all non-value added 4. Cooperation and collaboration is more important activities throughout its than ever. supply chain and achieves99.999% service accuracy through EDi based transactions, whilepicking is double checked by scanning JaN/itF barcodes and uses an automated carton cutter and automated replenishmentmeasuring weight. its systems are custom-made. at receiving, system. at the picking and loading stage the employee uses aactual receipt data is checked against aSN data. For case picking, picking cart with a weight checking function and passes this to aPaltac uses an automated storage and retrieval system. Labels are robot (atOm) that sorts the pieces into plastic totes. many of theadded automatically when cases are picked. the loader works with supporting technologies were developed and patented by Paltac,a computerised sorting system (aDELS) operated by a footswitch which means they are 100% fit for purpose.that won’t allow mistake to progress. For piece picking, Paltac Supply Chain Conference 2010 - ExECutivE Summary 17
  18. 18. Operational KPis Leading to Cost Excellence internally and ExternallyFrançois Olsthoorn, Head of Physical Distribution CEEmEa, Procter & Gamble, Switzerland a breakthrough in cost control light system created productive competition. the intervention proved to be a game changer for exceeded targets within a few months and ultimately brought Procter & Gamble. the Central & cost improvements of 130%. the drivers of cost were: Eastern Europe, middle-East & africa 1. Sub-optimal truck fill. (CEEmEa) region is logistically complex and highly challenging, comprising 100 2. Kilometres driven. developed and developing markets, 3. Contract compliance. with highly variable taxes, duties 4. Pallet fit and pallet cost. and regulations. Procter & Gamble 5. Demurrage charges for delayed shipments. operates 48 DCs across the region, coordinating more 6. Percentage of outside storage. than 70,000 inter-site 7. Percentage of local sourcing. truck moves a year 8. Productivity. and 20,000 shipping operations. However, the six KPis applied were: since 2004, costs had 1. Cube fill rate: optimal fill reduced trips, taking one in four begun to escalate out trucks off the road. of control: up 5% the 2. Contract compliance: hauliers on a contractual rate acrossfirst year, 13% in the second year and up 21% in 2007/8. “We had the region eliminated cost variation and understanding of the drivers of the cost increases,” Olsthoorn 3. % Ex-plant shipments.admits. “We had some theories but they were not good enough.there was a clear business need for intervention.” 4. vehicle turnaround times. 5. % Outside storage.the company began an operation to define and improver thedrivers of cost and applied six performance indicators, which were 6. DC productivity.reported monthly. internal visibility of performance via a traffic-Learnings in Supply ChainDeutsche Post DHL Group GoHelp Program: Logistics Excellencefor the relief Supply ChainKathrin Mohr, Program manager Disaster response teams, Deutsche Post DHL, GermanyH elping people after disasters depends on organisations. in Chile, 75 volunteers packed 10,300 a functioning supply chain. However this relief bags from unsorted goods that arrived at is rarely the case. the relief supply chain is Santiago airport.characterised by simultaneous deliveries, unsorted Looking forward, DHL has a program called Getgoods and a lack of consignees at the destination airports ready for Disaster (GarD). applyingairport. this leads to significant bottlenecks following the lessons the DtLs have learned over variousthe unloading of aircraft, which hamper the onward deployments, the mission is to prepare airports fortransportation of aid. Deutsche Post DHL’s Disaster managing disaster situation and avoid bottlenecksresponse teams (Drts), which number around by training local government200 volunteers across the company, reduce these employees and airport personnel.bottlenecks by sending specially trained logistics Key to the success of DHL’sexperts to handle goods at airports. Working in Disaster response team has beencooperation with the uN office for the Coordination the support and recognition ofof Humanitarian affairs the teams deploy to disasters top management and mutuallysuch as the earthquakes in Haiti and Chile. at Haiti, 36 beneficial partnership between theDHL volunteers handled 2,000 tons of relief goods over company and the united Nations.three weeks and provided support to more than 25 relief 18 Supply Chain Conference 2010 - ExECutivE Summary
  19. 19. Lessons in Sustainable SourcingDavid McLaughlin, vice President and managing Director: agriculture, World Wildlife Fund, uSaB y 2050 the world’s population is set to stand at it’s important therefore to focus energies. the first 3 billion or more, with 70% living in cities. and step is to carry out a supply chain risk assessment in while income is expected to increase by 2.9 four thematic areas:times, consumption could double and food demand 1. Supply particular could triple. Developing countries arelikely to dominate trade, David mcLaughlin believes, 2. Environmental most of the growth is likely to come from the 3. Social and political risk.poorest countries. How will agriculture deliver? 4. Economic and financial risk.WWF estimates that current demandalone is using 1.3 times what the planet this is critical in providing a roadmap and settingcan sustain in terms of natural resources. a framework to engage suppliers. the second stepEconomic growth in developing countries is to evaluate sourcing structures and move fromis good in terms of quality of life, but a transactional model to a transformational model.has a consumption impact. Expressed in it’s vital to align incentives, create partnerships,economic terms, we are currently using share resources and find mutual benefits, creatingthe Earth’s capital and not the interest. longer-term contracts with fewer spot purchases.By the mid 2030s we will need two a transactional structure exposes brands to multiple risks,planets if we continue business as normal. “the replenishment especially around traceability. the third step is to recognise thatsystem is failing completely and it’s the week before Christmas,” you have a role, even if your volumes are small compared to othermcLaughlin said. players. your voice can have significant impact and your customers and employees expect it. By partnering with WWF to adoptSadly, many companies are either still unaware of the issues or sustainable practices, companies can increase their productivityuncertain of where to begin. Some believe that sustainability and reduce their costs. a partnership with Chiquita, for example,equals a higher cost and resist change in the procurement process. brought productivity gains of +27% and cost savings of -12%.cherry on the Cakeattitude is What Determines altitudeMiles Hilton-Barber, Blind adventurerZ imbabwe-born Hilton-Barber lost his sight out of the blue at you some life principles i’ve stumbled 21, the result of a congenital condition. He had joined the air across as a blind man,” he said. “there force, hoping to be a pilot. Blind, the options seemed greatly are many sighted people who arediminished. However, he did not want to spend his life “weaving blind to their potential. i’m trying todog baskets”. He wanted to be a pilot. So he did. “Quality of life,” give them vision.”he says, “is not what happens to you, but what you do with what Hilton-Barber’s Life Principles:happens to you.” He became the first blind pilot to undertake a55-day, 21,000 kilometre microlite flight from London to Sydney. 1. Start with your goals and dreams,to succeed, he employed revolutionary speech-output technology, not with your circumstances.accompanied by a sighted co-pilot, and raised money for blind 2. Fear is only Falsecharities. to achieve, he says, “you need to start with your goals Evidence appearing real.and dreams, not with your circumstances”. 3. you are only as big as thethis was only the beginning for Hilton-Barber. His philosophy was dreams you dare to live.that “you can use of energy worrying or you can do new things”. 4. all achievers areif you want to grow, it’s important to step out of your comfort dreamers, but not allzone: “the last time you did a new thing is the last time you grew”. dreamers are achievers.With these thoughts in mind, Hilton-Barber – among many other 5. Successful people are those who go through bad things, andadventures – man-hauled a sledge 250 miles across antarctica, persevere.climbed Kilimanjaro and mont Blanc, became the first blind aviatorto break the sound barrier and to participate in a drag-racing 6. unity is the key: there is no room for backbiting. your futureevent, cage-dived with Great White Sharks and raced 150 miles depends on mutual interdependence.across the Sahara on foot. in each event he was accompanied by 7. “Never judge a man until you’ve walked a mile in his shoes.his friend Jon. in the process, he learned a lot about himself and that way, when you do judge him, you’re a mile away and you’vehis capabilities, and about teamwork and success. “i’m now giving got his shoes.” Supply Chain Conference 2010 - ExECutivE Summary 19
  20. 20. Thank you to our sponsorsfor their valued contribution to the Supply Chain Conference 2010: Do not miss the Supply Chain Conference 2011 11th - 13th October 2011 BARCELONA For more information on the Supply Chain Conference: