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VMI as technology to improve OSA and to contribute growth<br />By Olga Khruscheva, <br />SC Business Planning & Customer I...
Content<br />OSA  as a subject for consideration<br />How it might look like?<br />What’s available to influence?<br />How...
What is available on shelf?<br />
Consumer behavior if wanted product is not on shelf<br />Buys product later<br />Doesn’t buy at all<br />Buys other brand<...
Danone Belgium OSA Results<br />
Are our products always available to our shoppers?<br />Manufacturer<br />Retailer<br />
Vendor Managed Inventory is very useful to improveAvailability, lower stocks upstream of the factories<br />Supplier’s <br...
 Open data
 Orders made by Supplier</li></ul>Benefits<br /><ul><li>Stock reduction in total SC
 Reducing Bullwhip effect
 Better service levels</li></ul>FMCG<br />Plant<br />Raw material warehouse<br />VMI<br />
Why not apply VMI on Upstream part withsame benefits as upstream ?<br />STORE<br />WAREHOUSE OF SUPPLIER<br />FMCG<br />Pl...
Improvement on the traditional Preseller model<br />Sales Rep.<br />(50 stores)<br />Merchandiser<br />(1-3 stores)<br />K...
Main changes in process<br />Development, testing IT ordering tool<br />Creating Central ordering team <br />Creating Key ...
Billa is company for customers<br />One of the leaders in Europe Retail market, founder in 1924 and being presented by 69 ...
Innovations and changes develop our business
Best partner for our suppliers</li></li></ul><li>Count sales average [(1+2+1+3)/4=1.75~2)]<br />Reduce by available stock ...
Distribution Centre<br />Lineacom Principles<br />Stock & Sales integration  <br />Sales Estimation based on Trends & Futu...
Order creation process<br />Order-fax<br />Order<br />Enter stock and loss to the system<br />Check stock count accuracy <...
Basic Forecasting principles<br />Based on the cleaned sales history an estimation for the next sales  period is made.<br ...
Basic Order principles<br />
Basic Order principles<br />
Forecasting<br />
Basic Order principles<br />
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Danone vmi presentation ecr 2010

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Danone vmi presentation ecr 2010

  1. 1. VMI as technology to improve OSA and to contribute growth<br />By Olga Khruscheva, <br />SC Business Planning & Customer Integration Director,<br />APICS CSCP<br />
  2. 2. Content<br />OSA as a subject for consideration<br />How it might look like?<br />What’s available to influence?<br />How we do it…<br />Do you feel the difference?<br />
  3. 3. What is available on shelf?<br />
  4. 4. Consumer behavior if wanted product is not on shelf<br />Buys product later<br />Doesn’t buy at all<br />Buys other brand<br />17%<br />36%<br />8%<br />Buys in other store<br />Buys another flavor<br />19%<br />20%<br />+<br />= Retailer sales loss<br />+<br />= Supplier sales loss<br />
  5. 5. Danone Belgium OSA Results<br />
  6. 6. Are our products always available to our shoppers?<br />Manufacturer<br />Retailer<br />
  7. 7. Vendor Managed Inventory is very useful to improveAvailability, lower stocks upstream of the factories<br />Supplier’s <br />plant<br />Raw materials supplies<br />Key principles of VMI <br /><ul><li> Supplier’s stock is managed by producer
  8. 8. Open data
  9. 9. Orders made by Supplier</li></ul>Benefits<br /><ul><li>Stock reduction in total SC
  10. 10. Reducing Bullwhip effect
  11. 11. Better service levels</li></ul>FMCG<br />Plant<br />Raw material warehouse<br />VMI<br />
  12. 12. Why not apply VMI on Upstream part withsame benefits as upstream ?<br />STORE<br />WAREHOUSE OF SUPPLIER<br />FMCG<br />Plant<br />
  13. 13. Improvement on the traditional Preseller model<br />Sales Rep.<br />(50 stores)<br />Merchandiser<br />(1-3 stores)<br />KA Executive<br />(20 stores)<br />Order Creator<br />(40 stores)<br />SC<br />SALES<br />Stock taking<br />Shelf FIFO control<br />OSA, PPED<br />Price<br />Fridge POSM <br />Promo <br />Promo materials<br />4P<br />Stock control<br />Order Taking<br />Assortment<br />Promo management<br />OOS<br />VOLUME CONTROL<br />OSA, PPED<br />Order taking<br />Stock FIFO control<br />Price<br />Fridge POSM <br />Promo<br />Promo materials<br />CONTROL AND FOLLOW UP<br />CONTROL AND FOLLOW UP<br />CONTROL AND FOLLOW UP<br />CONTROL AND FOLLOW UP<br />Focus?<br />Focus<br />Focus<br />Focus<br />
  14. 14. Main changes in process<br />Development, testing IT ordering tool<br />Creating Central ordering team <br />Creating Key Account executive team<br />Merchandizers team<br />Start stock counting<br />After 6 weeks of history – start ordering<br />
  15. 15. Billa is company for customers<br />One of the leaders in Europe Retail market, founder in 1924 and being presented by 69 supermarkets and 3 hypermarkets in Russia since 2004 year.<br />Mission statement<br /><ul><li>It is all about our customers
  16. 16. Innovations and changes develop our business
  17. 17. Best partner for our suppliers</li></li></ul><li>Count sales average [(1+2+1+3)/4=1.75~2)]<br />Reduce by available stock [2-22=-20<0]<br />Promo start so <br />Order can be created like<br />How reliable sales data?<br />How accurate stock?<br />If full information used for promo calculation?<br />
  18. 18. Distribution Centre<br />Lineacom Principles<br />Stock & Sales integration <br />Sales Estimation based on Trends & Future Events (National/Regional)<br />Order Validation/Modification based on Store Specificities<br />
  19. 19. Order creation process<br />Order-fax<br />Order<br />Enter stock and loss to the system<br />Check stock count accuracy <br />Create order based on history and <br />promo<br />Count stock and loss<br />Send stock and loss <br />information to OC<br />Enter order to the <br />customer’s system<br />- Merchandizer <br />- Order creator (OC)<br />- SAP<br />
  20. 20. Basic Forecasting principles<br />Based on the cleaned sales history an estimation for the next sales period is made.<br />This estimated sales is influenced by:<br />
  21. 21. Basic Order principles<br />
  22. 22. Basic Order principles<br />
  23. 23. Forecasting<br />
  24. 24. Basic Order principles<br />
  25. 25. 725<br />-480<br />590<br />-225<br />-165<br />400<br />245<br />Delivery P2<br />Delivery P1<br />Proposed<br />End Stck P2<br />Correction P1<br />Correction P2<br />Short Shelflife<br />Short Shelflife<br />Begin Stock P1<br />Sales Forecast<br />Sales Forecast<br />P1<br />P1<br />Quantity of Products already in Store Stock where Shelflife is too low to sell in Period<br />-600<br />Short Shelflife Stock Correction<br />Sales Order = (Sales Forecast)*(Safety stock Policy) – (Begin Stock + Delivery P1 – Short Shelflife Correction)<br />
  26. 26. Basic Order principles<br />
  27. 27. Safety Stock<br /><ul><li>Defined by Product / Store Combination
  28. 28. Dynamic & Automatic based on Sales Forecast (% of Period(s) to Cover)
  29. 29. Alignement with Business Strategy
  30. 30. Alignement with Customer Expectations</li></li></ul><li>Why VMI by Danone?<br />FOCUS on Dairy, No High Performaning Tool available on market.<br />IMMEDIATE & FULL listing of INNOVATIONS<br />TRUST in Quality by working with dedicated and experienced PEOPLE <br />HIGHLY REACTIVE in a Fast Moving Environment<br />
  31. 31. Billa: something to compare<br />1. OSA in Billa stores w/o Central Ordering<br />OSA 83,3%<br />OOS 16,7%<br />OSA<br />93,0%<br />OSA<br />83,3%<br />2. OSA in Billa stores with Central Ordering<br />OSA 93,0%<br />OOS 7,0%<br />OOS<br />16,7%<br />OOS<br />7%<br />
  32. 32. Billa: something to compare<br />16,7%<br />8,7%<br />No central ordering<br />Central ordering<br />Vertical Growth in Billa, 2009 vs 2010<br />
  33. 33. OSA is well contributed for growth<br />
  34. 34. Thank you!<br />Moscow, 2010<br />

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