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SCL Antwerp - Patrick Dittli, Global Director Supply Chain, Metro Cash & Carry

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CONNECTIVITY: BOOSTING CUSTOMER
CENTRICITY INTO THE VALUE CHAIN

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SCL Antwerp - Patrick Dittli, Global Director Supply Chain, Metro Cash & Carry

  1. 1. CONNECTIVITY: BOOSTING CUSTOMER CENTRICITY INTO THE VALUE CHAIN SCL ANTWERP EVENT 2015 June 2015 Patrick DITTLI Global Director Supply Chain, Metro Cash & Carry
  2. 2. CONTENTS METRO Cash & Carry September 2014 | Member of METRO GROUP 1 01 SHORT INTRODUCTION 02 GAME HAS CHANGED – THE OPPORTUNITY! 03 CHALLENGES TO OVERCOME – DO NOT IGNORE 04 HOW CONNECTIVITY BRINGS CUSTOMER CENTRICITY 05 DIALOGUE
  3. 3. SHORT INTRODUCTION METRO Cash & Carry September 2014 | Member of METRO GROUP 2
  4. 4. Cross-functional companies METRO CASH & CARRY – A CORE BRAND OF METRO GROUP METRO GROUP sales 9M 2013: €46.3 billion Hypermarkets Sales 9M 2013 (bn): €7.3 Countries**: Stores**: 3 324 Status: 30 September 2013 *Status: 31 August 2014 **Status: 30 June 2014 METRO Cash & Carry September 2014 | Member of METRO GROUP 3 Wholesale Sales 9M 2013 (bn): €22.6 Countries*: 28…. Stores*: 764 Department stores Sales 9M 2013 (bn): €2.1 Countries**: 2 Stores**: 137 Consumer electronics stores Sales 9M 2013 (bn): €14.4 Countries**: 15 Stores**: 988
  5. 5. revolutionary … what a success! METRO Cash & Carry September 2014 | Member of METRO GROUP 4 • 50,000 articles, Food & Non-Food • >15,000m2 net sales area • Location in outskirts of city • Huge parking lot • Aggressive pricing • Cardholders only (business owners) • … a privilege! HOW IT ALL STARTED
  6. 6. Our business is global – geographies are different! METRO GROUP 2014: 2,212 LOCATIONS IN 31 COUNTRIES  Netherlands METRO C&C Media-Saturn 17 45  Pakistan METRO C&C 9  Poland MAKRO C&C Media-Saturn 41 71  Portugal MAKRO C&C Media-Saturn 10 9  Romania METRO C&C Real 32 4  Russia METRO C&C Media-Saturn 73 62  Serbia METRO C&C 10  Slovakia METRO C&C 6  France  Spain MAKRO C&C 37  Switzerland Media-Saturn 25 Status: 30 June 2014 METRO Cash & Carry September 2014 | Member of METRO GROUP 5  Germany METRO C&C 107 Media-Saturn 416 Real 308 Galeria Kaufhof 122  Austria METRO C&C 12 Media-Saturn 47  Belgium MAKRO C&C 13 Media-Saturn 23 Galeria Kaufhof 15  Bulgaria METRO C&C 14  China METRO C&C 78  Croatia METRO C&C 7  Czech Republic MAKRO C&C 13  Denmark METRO C&C 5 METRO C&C  Greece 93 MAKRO C&C 9 Media-Saturn 10  Hungary METRO C&C 13 Media-Saturn 21  India METRO C&C 16  Italy METRO C&C 49 Media-Saturn 116  Japan METRO C&C 9  Kazakhstan METRO C&C 8  Luxembourg Media-Saturn 2  Moldova METRO C&C 3 Media-Saturn  Sweden 72 Media-Saturn 28  Turkey METRO C&C 27 Media-Saturn 41 Real 12  Ukraine METRO C&C 33  Vietnam METRO C&C 19
  7. 7. GAME HAS CHANGED – THE OPPORTUNITY! METRO Cash & Carry September 2014 | Member of METRO GROUP 6
  8. 8. What got you here, will not get you there… METRO Cash & Carry September 2014 | Member of METRO GROUP 7 GAME HAS CHANGED – AMAZONFRESH.COM, WAITROSE.COM PlanetRetailLebensmittelZeitung
  9. 9. GAME HAS CHANGED – ANALYSTS METRO Cash & Carry September 2014 | Member of METRO GROUP 8 „Revolution in Lebensmittelhandel“ (E&Y) „Convenience and on-line change the game“ (Planet Retail) „Digital consumer demand“ (SCM World) PlanetRetail
  10. 10. CHALLENGES TO OVERCOME – DO NOT IGNORE METRO Cash & Carry September 2014 | Member of METRO GROUP 9
  11. 11. WHERE DO WE (AND MANY RETAILERS) COME FROM? brick & mortar … METRO Cash & Carry September 2014 | Member of METRO GROUP 10 … and therefore, delivering home… • … „is not our business“ • … „cannibalizes our stores“ • … „is not as profitable“ • … „is not part of my bonus“ • … „needs different IT systems“ • … „we do not have capability“ • … we had it all!
  12. 12. … WE ALMOST FORGOT WHAT WE ALSO HAD – AND HAVE! METRO Cash & Carry September 2014 | Member of METRO GROUP 11
  13. 13. … WE ALMOST FORGOT WHAT WE ALSO HAD – AND HAVE! METRO Cash & Carry September 2014 | Member of METRO GROUP 12 20 million customers (card holders) … • Addresses, emails, business details • Intimacy with our A- and B-customers A massive, unrivaled opportunity to create value, provide targeted solutions!
  14. 14. Internal • „Store is Core“ • Store vs. Headquarter • Other channels are not just „incremental“ • Seamless shopping experience? • Assortment & Solutions • Sales Force • Logistics Network (& stocking policies) • IT & processes AND IT WOULD BE WRONG TO CLAIM THAT WE HAVE IT ALL METRO Cash & Carry September 2014 | Member of METRO GROUP 13
  15. 15. HOW CONNECTIVITY BRINGS CUSTOMER CENTRICITY METRO Cash & Carry September 2014 | Member of METRO GROUP 14
  16. 16. THROUGH CROSS-FUNCTIONAL EXERCISE CONNECTIVITY INTENDS TO BREAK THE VERTICAL FUNCTIONAL PERSPECTIVE Marketing Master Data Offer Merchandise Supply Chain Operations Supplier Customer END-TO-END PROCESSES END-TO-END CUSTOMER CENTRICITY VALUE-CHAIN HR Finance METRO Cash & Carry September 2014 | Member of METRO GROUP 15
  17. 17. FOCUS ON CUSTOMER, OFFER AND SUPPLIER: TO BE MASSIVELY IMPROVED BY WELL CONNECTED PROCESS STEPS, GOOD SYSTEM CONNECTIVTY AND CLARITY IN ROLES AND RESPONSIBILITY. METRO Cash & Carry September 2014 | Member of METRO GROUP 16 Three areas appear to be offering greatest opportunities OrderManagement ProductLifeCycle Management PromotionManagement
  18. 18. THROUGH CROSS FUNCTIONAL EXERCISE CONNECTIVITY INTENDS TO BREAK THE VERTICAL FUNCTIONAL PERSPECTIVE (Central) Order Management Product Life Cycle Master Data Mgmt Logistics Flows Delivery conditions Supplier performance Stock Management Considering the “stone in the water effect”, we agreed to focus first on Order Management OrderManagement ProductLifeCycle Management PromotionManagement Three areas appear to be offering greatest opportunities METRO Cash & Carry September 2014 | Member of METRO GROUP 17
  19. 19. Wave 1 Wave 2 Wave 3 METRO Cash & Carry Cluster 1 Cluster 2 Cluster 3 … Remove duplicates and cluster pain points into key statements Listing pain points Cluster 1 Cluster 2 Cluster 3 Must-do Postpone Consider Understandable and consistent description Cluster pain points in problem situation Process Mapping and pain point collection Assign to customer / company value Document pain points in list 1 2 3 4 Cluster Id Cluster Name(optional) ProblemSituations Pain points ID Painpointsrelatedto that cluster 2 Orderentrytoolateinthesystem 17 Wedon't havetheproduct instock Deliverytoo late 11 Our replenishmentistoolowfrequent/ highvolume 19 Wehavetopaypenaltiesdueto toolatedeliveries 13 Wedon't knowwhatthecustomerwantstoorderinthenext weeks 8 Noinsightinphasingin/ out of products(promoandNPD) 3 Pickingerrors 7 Stockdifferencesbetweensystemandwarehouse Deliverynot 4 Promoproductsoftenaresoldout A Deliveryis notontimeor complete <situation 3> in full Pain Points Prioritize clusters; where to put the (initial) focus Absolute impact calculation 5 6 Define solutions and (if solutions hard to find): root cause analysis. Estimate which impact might be solved implementing the solution(s) Finding solutions 7 SCI: situation, consequence, impact. Decision Management Board 8 Proposal defined solutions to Board and get approval to start TO BE) Closure AS-IS CONNECTIVITY ES METHODOLOGY (AS –IS) September 2014 | Member of METRO GROUP 18
  20. 20. Work out detailed Project plan per area 2 3 4 5 AS IS: Board approval project brief per solution 1 6 Impact on RACI or structure Explain and train (pilot group) Securing 7 Board Discharge 8 Work out the plan to implement the solutions One A4 to get Board approval for the preferred solutions Prepare for required changes Pilot the solution(s) Go live with the solution in part of the business to understand the effect Adapt process / Work Instruction Adapt tools & systems Learn, adapt and prepare for rollout Adapt tools & systems Explain and train (involved employees) METRO Cash & Carry September 2014 | Member of METRO GROUP 19 Implementation Go live with the solution(s) in the speed as agreed in the plan Adherence and performance are monitored with periodical performance reviews Adapt process / Work Instruction CONNECTIVITY ES METHODOLOGY (TO-BE)
  21. 21. SITUATIONS: DELIVERY VS. ORDER MANAGEMENT ORDER MANAGEMENT DELIVERY MASTER DATA INCOMPLETE & INACCURATE STOCK NOT UPDATED FOR ORDER RELEASE OPL PARAMETRES NOT ACCURATE DELIVERY CONDITIONS & FLOW TYPES NOT ADAPTED TO STORE NEEDS SYSTEMS NOT ALIGNED WITH BUSINESS NEEDS 1. 2. 3. 4. 5. MASTER DATA INCOMPLETE & INACCURATE STOCK NOT UPDATED FOR ORDER RELEASE DELIVERY CONDITIONS & FLOW TYPES NOT ADAPTED TO STORE NEEDS SYSTEMS NOT ALIGNED WITH BUSINESS NEEDS 1. 2. 3. 5. DELIVERY CONDITIONS & FLOW TYPES NOT ADAPTED TO CUSTOMER NEEDS 4. BE AWARE: BOTH STREAMS HAVE SAME SITUATIONS, BUT HAVE DIFFERENT CONSEQUENCES WITH DIFFERENT PROBLEMS! METRO Cash & Carry September 2014 | Member of METRO GROUP 29
  22. 22. SITUATION-CONSEQUENCE-IMPACT (SCI) METRO Cash & Carry September 2014 | Member of METRO GROUP 21
  23. 23. ASSUMPTIONS FOR POTENTIAL IMPACT CALCULATIONS METRO Cash & Carry September 2014 | Member of METRO GROUP 22  Time expressed in Hours. (Possible evaluation in FTE / € as well)  Other Impact are expressed in €.  In case of possible different “magnitude”, the conservative approach prevails.  If the same impact appears twice or more, it has been divided by each consequence proportionally  Period: either year 2013 or 1 rolling year.  Perimeter considered:  Division: Dry Food, Non Food, Fresh. (Ultra fresh excluded)  Store : All 37 ES stores Goal of the potential impact calculations:  measure the „As is“ situation (e.g. DILO)  measure the undesired effects/consequences (e.g. Assumptions)
  24. 24. Supply Chain Operations Offer METRO Cash & Carry September 2014 | Member of METRO GROUP 23 DOT Free up re-ordering time of store Improve availability Optimize stock DARWIN Better availability Optimized stock Flow types & delivery conditions adapted to store needs PILLAR Guarantee quality Master Data accuracy ICARUS Process adherence Performance management Continuous improvement Guidance and stimulation of change
  25. 25.  Maintain the Focus during Projects Implementation and Development.  To ensure Sustainability along the time and departments involved. ICARUS Customer Satisfaction improvement Efficiency enabler Working Capital Focus  Improve service level  Become preferred supplier for independent HORECA customer  Ensure FSD development without interfering C&C development. PERFECT ORDER PROFIT. GROWTH Customer Satisfaction improvement Operational efficiency BENEFITS METRO Cash & Carry September 2014 | Member of METRO GROUP 24 DO T  Free up time in stores for customer added value tasks  Increase Stock Availability for customers PILL AR  Increase efficiency for on-shelf availability by accurate information. DAR W IN  Appropriate stock levels and stock quality  Develop flexible sourcing process as per business development needing
  26. 26. Video METRO Cash & Carry September 2014 | Member of METRO GROUP 25
  27. 27. DIALOGUE METRO Cash & Carry September 2014 | Member of METRO GROUP 26
  28. 28. DIALOGUE METRO Cash & Carry September 2014 | Member of METRO GROUP 27 Q & A
  29. 29. METRO Cash & Carry September 2014 | Member of METRO GROUP 28
  30. 30. Patrick Dittli Tel: +49.211.969.1317 Mob: +49.151.582.24888 Patrick.dittli@metro.de METRO AG Metro-Strasse 1 40235 Duesseldorf Germany CONTACT METRO Cash & Carry September 2014 | Member of METRO GROUP 29

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