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Ecr presentation ss chain - jeffrey - final

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Ecr presentation ss chain - jeffrey - final

  1. 1. Changing the Game with Your Customers – A Supply Chain Strategy in Action ECR Asia Pacific Conference 2008, Thailand Jeffrey Russell, Accenture / Metta Siramongkholkarn, L’Oreal
  2. 2. In order to drive Consumer Products companies performance to the next level, many are adopting a ‘Game Changing Supply Chain’ strategy Copyright © 2008 Accenture All Rights Reserved. - Every Day Great Execution - Getting the basics right in terms of people process, systems, organisation and data. Cost optimisation through rationalisation of the cost base - Performance Optimization - Focus on service levels by raising the performance bar, fine-tuning the overall model and collaboration with the extended supply chain. - Game Changing Supply Chain - Supply chain differentiation based on customer / consumer behaviour and value to drive top-line growth Supply Chain Performance Journey Value
  3. 3. Effective supply chain strategies form the basis of competitive advantage and increase shareholder value <ul><ul><li>Developing differentiated channel value propositions </li></ul></ul><ul><ul><li>Improving the ability to meet customer needs and buying behaviour </li></ul></ul><ul><ul><li>Reducing total cost to serve as the level of service provided is varied between channel segments </li></ul></ul><ul><ul><li>Aligning operations and sales and marketing in the way they treat customers </li></ul></ul><ul><ul><li>Enabling the organisation to structure resources around segments , e.g. options to outsource customer service activities for selected segments vs retain in-house </li></ul></ul>Copyright © 2008 Accenture All Rights Reserved.
  4. 4. Typical benefits achieved in FMCG companies through customer aligned supply chains Copyright © 2008 Accenture All Rights Reserved.
  5. 5. Historically, FMCG companies have developed a ‘one size fits all’ supply chain that is designed to achieve cost efficiency Copyright © 2008 Accenture All Rights Reserved. Market Segmentation Supply Chain 1.0 Supply Replenishment Strategies Supply Sourcing Options Network Optimisation Product Segmentation & Portfolio Management Fulfilment Operations Customer Segmentation Demand Profiling & Forecasting Strategy Supply Chain Strategy Supply Alignment Demand Generation Foundation Cost to serve Sales & Operations Planning Performance Metrics Leadership Behaviours Culture <ul><li>Capabilities </li></ul><ul><li>Process </li></ul><ul><li>Organisation </li></ul><ul><li>Talent </li></ul><ul><li>Technology </li></ul>PLM Risk Management -- Accenture’s SC Customer Alignment Framework --
  6. 6. Accenture’s Customer Alignment Framework provides the structure and rigor to design ‘fit for purpose’ supply chains for differentiated customer/product segments Copyright © 2008 Accenture All Rights Reserved. Supply Chain 2.0 Supply Chain 1.0 Supply Chain 3 Product Segmentation + Portfolio Management Market Segmentation Customer Segmentation Demand Profiling & Forecasting Supply Replenishment Strategies Supply Sourcing Options Network Optimisation Fulfilment Operations Supply Chain 2 Product Segmentation + Portfolio Management Market Segmentation Customer Segmentation Demand Profiling & Forecasting Supply Replenishment Strategies Supply Sourcing Options Network Optimisation Fulfilment Operations Strategy Foundation Supply Chain Strategy Supply Alignment Demand Generation Business Strategy Supply Chain 1 Market Segmentation Product Segmentation & Portfolio Management Customer Segmentation Demand Profiling & Forecasting Supply Replenishment Strategies Supply Sourcing Options Network Optimisation Fulfilment Operations Cost to serve Sales & Operations Planning Performance Metrics Leadership Behaviours Culture <ul><li>Capabilities </li></ul><ul><li>Process </li></ul><ul><li>Organisation </li></ul><ul><li>Talent </li></ul><ul><li>Technology </li></ul>PLM Risk Management
  7. 7. Example Supply Chain Re-design “fit for purpose” Copyright © 2008 Accenture All Rights Reserved. SC Manager Customer Care Sourcing / Procurement Physical distribution Segment 1 Segment 2 Segment 3 Segment 1 Segment 2 Segment 3 Segment 1 Segment 2 Segment 3 SC Manager Segment 1 SC Manager Segment 2 SC Manager Segment 3 Customer Care Sourcing / Procurement Physical distribution Customer Care Sourcing / Procurement Physical distribution Customer Care Sourcing / Procurement Physical distribution Challenges : - multi-skills Supply Chain Managers - Limit increase of headcounts 6 – 12 Months
  8. 8. Benefits after 1 Year Copyright © 2008 Accenture All Rights Reserved. <ul><li>Privileged Relation 1 Point of contact between Supply Chain manager (supplier / retailer) </li></ul><ul><li>100% focus on Service level : Gain 10% in average over 12 months </li></ul><ul><li>Tailor-made Service (especially for Mass Market retailers) </li></ul><ul><li>Team/talent development : Create succession Plan </li></ul>
  9. 9. Different supply chain models are more appropriate depending on the demand predictability and the nature of the customer relationship Copyright © 2008 Accenture All Rights Reserved. Tight Loose Customer Relationship High Low Demand Predictability Segment 1 Segment 2 Segment 3 Segment 4 Lean Agile Transactional ‘ Base Model’ Flexible Collaborative Agile Joint Planning
  10. 10. Potential service offerings for strategic customer group Copyright © 2008 Accenture All Rights Reserved. <ul><li>Potential service offerings to Customer Group: </li></ul><ul><ul><li>Tier 1 strategic importance </li></ul></ul><ul><ul><li>Low relative demand variability </li></ul></ul><ul><ul><li>Demanding behaviour </li></ul></ul>Trade terms Efficient Assortment / Ranging Growth Incentives Product Discount - case deals Checkout Display Promotional Display Fulfilment Weekend deliveries Advance shipment notification Backhaul Ex factory gate / NDC Cross docking Direct store delivery Drop trailer Operational Integration Category Management Cash Management Standard (prompt) payment Accelerated payment Electronic payment Order to Cash Web ordering Field sales call Phone / fax EDI Weekend ordering Short lead time EDI invoice EFT e-POD CRM Nominated logistics contact
  11. 11. Differentiation between the stable and variable components of demand is a key step to determine fulfillment setup – managing volumes differently balances service levels and cost to serve Copyright © 2008 Accenture All Rights Reserved. <ul><li>Fulfil through a ‘lean’ supply chain configuration: </li></ul><ul><ul><li>Maximum capacity </li></ul></ul><ul><ul><li>Lowest cost </li></ul></ul><ul><ul><li>Long lead time </li></ul></ul><ul><li>Identify what parts of the business are variable and truly complex: </li></ul><ul><ul><li>Variable demand </li></ul></ul><ul><ul><li>Promotions </li></ul></ul><ul><ul><li>Premium products </li></ul></ul><ul><ul><li>Low visibility customers </li></ul></ul><ul><li>Fulfil through a more flexible supply chain: </li></ul><ul><ul><li>Local sourcing and / or finishing </li></ul></ul><ul><ul><li>Short lead times </li></ul></ul><ul><ul><li>Variable configurations </li></ul></ul>- Demand Types - - Fulfilment setup - <ul><li>Identify what parts of the business can be treated as fundamentally stable: </li></ul><ul><ul><li>Stable, predictable demand </li></ul></ul><ul><ul><li>Commoditised or mass market products </li></ul></ul><ul><ul><li>Collaborative customers </li></ul></ul>Stable = 59% = 41% Stable (60%) Variable (40%) Customer C1 Indicative stable / variable split Customer C1 Indicative SC alignment
  12. 12. So in summary, consumer goods companies need to change the game while continuing to deliver everyday execution Copyright © 2008 Accenture All Rights Reserved. - Every Day Great Execution - Getting the basics right in terms of people process, systems, organisation and data. Cost optimisation through rationalisation of the cost base - Performance Optimization - Focus on service levels by raising the performance bar, fine-tuning the overall model and collaboration with the extended supply chain. - Game Changing Supply Chain - Supply chain differentiation based on customer / consumer behaviour and value to drive top-line growth Supply Chain Performance Journey Value

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