SF State SP class 10..

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  • A demand chain is a network of trading partners that extends from manufacturers to end consumers. The partners exchange information, and finished goods flow through the network’s physical infrastructure. The physical facilities include manufacturers’ warehouses, wholesalers’ distribution centers, retail chains’ warehouses, and retail outlets. The key to the demand chain is to enable real-time demand to drive all replenishment and supply-chain considerations – rather than ‘pushing’ merchandise out to the customer based on product availability and manufacturing production plans, the demand chain perspective focuses on the ‘pull’ of the demand signal from the end-consumer to drive upstream supply considerations. In this way, the demand chain is very distinct from the traditional supply chain view – and requires very different solutions to address it’s unique and highly complex business problems.
  • A demand chain is a network of trading partners that extends from manufacturers to end consumers. The partners exchange information, and finished goods flow through the network’s physical infrastructure. The physical facilities include manufacturers’ warehouses, wholesalers’ distribution centers, retail chains’ warehouses, and retail outlets. The key to the demand chain is to enable real-time demand to drive all replenishment and supply-chain considerations – rather than ‘pushing’ merchandise out to the customer based on product availability and manufacturing production plans, the demand chain perspective focuses on the ‘pull’ of the demand signal from the end-consumer to drive upstream supply considerations. In this way, the demand chain is very distinct from the traditional supply chain view – and requires very different solutions to address it’s unique and highly complex business problems.
  • First I would like to remind you that although I have talked a lot about inventory, that is an artifact of our first vertical being Rx, and it is an convenient metric In fact we do optimize across all costs to help our demand chain clients achieve lowest landed cost Explain chart
  • A demand chain is a network of trading partners that extends from manufacturers to end consumers. The partners exchange information, and finished goods flow through the network’s physical infrastructure. The physical facilities include manufacturers’ warehouses, wholesalers’ distribution centers, retail chains’ warehouses, and retail outlets. The key to the demand chain is to enable real-time demand to drive all replenishment and supply-chain considerations – rather than ‘pushing’ merchandise out to the customer based on product availability and manufacturing production plans, the demand chain perspective focuses on the ‘pull’ of the demand signal from the end-consumer to drive upstream supply considerations. In this way, the demand chain is very distinct from the traditional supply chain view – and requires very different solutions to address it’s unique and highly complex business problems.
  • A demand chain is a network of trading partners that extends from manufacturers to end consumers. The partners exchange information, and finished goods flow through the network’s physical infrastructure. The physical facilities include manufacturers’ warehouses, wholesalers’ distribution centers, retail chains’ warehouses, and retail outlets. The key to the demand chain is to enable real-time demand to drive all replenishment and supply-chain considerations – rather than ‘pushing’ merchandise out to the customer based on product availability and manufacturing production plans, the demand chain perspective focuses on the ‘pull’ of the demand signal from the end-consumer to drive upstream supply considerations. In this way, the demand chain is very distinct from the traditional supply chain view – and requires very different solutions to address it’s unique and highly complex business problems.
  • Even with 100+ days of goods in the Demand Chain, many products are still frequently out of stock on the store shelves. This graph is from a study conducted by P&G in conjunction with a large grocery retailer. During the study, the out of stock occurrences for the top selling 2000 products were tracked in 800 stores. The lowest number of out of stocks of the 2000 products (275 out of 2000) occurred at mid-day Saturday. By Sunday morning the number had risen to over 350 being out of stock. In other words, the highest number of out of stock products occurred during one of the highest sales volume days.
  • The impact of these out of stocks at the store shelf are felt both manufacturers and retailers. The study concluded that the retailer suffered a 11%+ loss of sales. It was thought that consumers will buy another size of the same brand. The study concluded this occurred in less than 25% of the instances. This means that the consumer either purchased a competitor’s brand, or did not purchase at all. How can retailers and manufacturers collaborate to improve services levels and reduce the significant amount of capital tied up in unnecessary inventories? The next chart begins an explanation of what is needed in order for manufacturers and retailers to cooperatively work together to optimize the flow of finished goods.
  • A demand chain is a network of trading partners that extends from manufacturers to end consumers. The partners exchange information, and finished goods flow through the network’s physical infrastructure. The physical facilities include manufacturers’ warehouses, wholesalers’ distribution centers, retail chains’ warehouses, and retail outlets. The key to the demand chain is to enable real-time demand to drive all replenishment and supply-chain considerations – rather than ‘pushing’ merchandise out to the customer based on product availability and manufacturing production plans, the demand chain perspective focuses on the ‘pull’ of the demand signal from the end-consumer to drive upstream supply considerations. In this way, the demand chain is very distinct from the traditional supply chain view – and requires very different solutions to address it’s unique and highly complex business problems.
  • We focus on clients operating in the demand chain Clients that deliver a manufacturer’s finished good to the end user Want to make sure we are all using the same terms. Supply Chain is the manufacturing portion of the Value Chain in which a product is manufactured. The output is a finished good. Demand Chain is wholesalers and retailers. The reason there is a ? is that a Manufacturers market warehouse looks like a Demand Chain activity if managed correctly Demand Chain companies have their own set of problems unrelated to Supply Chain companies problems CEO of Sysco or Walgreens has got different problems than the CEO of Clorox. CEO Clorox worrying about differentiating his product from store brand watered down bleach and how to make it efficiently and price it competitively CEO Walgreens worried about minimizing the cost of the Clorox, deciding whether Clorox should be a loss leader and how to keep his shelf stocked with this high cubic volume, low price product while minimizing his overall costs
  • Several industry studies have concluded that the current 140+ days required for an Rx finished product to reach the patient could be reduced to approximately 55 days. Similar studies of Consumer Packaged Goods (CPG) replenishment concludes that the current 104 days could be reduced to approximately 61 days. If this could be accomplished, billions of dollars of capital would be extracted from the value chain. In addition, manufacturing efficiency could be improved significantly , reducing manufacturing costs while reducing the need for peak load manufacturing capacity. This graphic denotes the Value Chain, starting with raw materials on the left, with value being added as the product flows towards the right to the consumer. The Value chain is split between the supply chain portion and the demand chain portion. The supply chain is focused on creating the supply (turning raw materials and sub-assemblies into finished goods). The Demand Chain is focused on satisfying demand from the consumer. In truth, the Supply Chain also wishes to build the right quantity at the right time, but not too many, finished goods to satisfy demand from their customers (retailers and wholesalers ) who are in turn responding to demand from the consumers. Manufacturers have great difficulty is predicting how much their wholesale and retail customers will order and when. They also lack visibility of all the pools of inventory, handling steps and lead times between them and the consumer. In addition, even if they had the information (scanner data, etc), they lack a tool which can convert that information into actionable replenishment quantities, dates and destinations. Therefore they make their best guess and build a manufacturing plan to satisfy that best guess. These demand predictions are typically 30% to 40% off actual demand, resulting in surprises for the manufacturer and a need to rapidly reschedule the plant to satisfy the unexpected demand (this is where i2 and Manugistics products are used) or in the case where they have over estimated demand, what to do with the excess. Everyone in the Value chain has an incentive to have exactly what the consumer seeks in the right quantity, at the right place at the right time. They also have a common incentive to get the product to the consumer at the lowest total landed cost. Total cost is made up primarily of the combined total of, product price, inventory, transportation and handling costs. NONSTOP’s business is to provide the tools and services needed by manufacturers, wholesalers and retailers to optimize the total cost of satisfying demand from the consumer. Our Vision is to provide manufacturers with the tools they need in order to convert Demand data into actionable plans for the plants. What finished goods are required at what time in order to satisfy their retail and wholesale customer, so that the customer can in turn satisfy the demand from the consumer.
  • Identified 49 applications needed by retailers in four areas Customer systems, Fulfillment, i2, Manugistics, Manhattan Ops and financial, SAP, Peoplesoft, Oracle Merchandise/product mgt, Retek, JDA,
  • You can see that Bob’s focus on sales has also yielded results also and this was accomplished during a very difficult market for enterprise software. This is the kind of chart we saw in the late 80’s and early 90’s. Again an indicator of the quality team Bob is building.
  • Our solution is focused on the movement of finished goods the point product leaves the manufacturer to off the shelf at the consumer. Some people refer to this as the demand portion of the supply chain. We address the flow of products that are pulled by demand and those that are pushed by the manufacturer and retailer. Staples is our launch customer for our new planning product. Other new customers not shown are PetSmart, Foot Locker, and Disney.com
  • Wholesale distributors and manufacturers make up about two thirds of our customer base. We have many of the largest players, testifying to the scalability of our offerings. Sysco is the largest distributor of food in the world We have a 92% market share in wholesale prescription drugs
  • A demand chain is a network of trading partners that extends from manufacturers to end consumers. The partners exchange information, and finished goods flow through the network’s physical infrastructure. The physical facilities include manufacturers’ warehouses, wholesalers’ distribution centers, retail chains’ warehouses, and retail outlets. The key to the demand chain is to enable real-time demand to drive all replenishment and supply-chain considerations – rather than ‘pushing’ merchandise out to the customer based on product availability and manufacturing production plans, the demand chain perspective focuses on the ‘pull’ of the demand signal from the end-consumer to drive upstream supply considerations. In this way, the demand chain is very distinct from the traditional supply chain view – and requires very different solutions to address it’s unique and highly complex business problems.
  • SF State SP class 10..

    1. 1. San Francisco State University Supply Chain Management Class October 7, 2004 Inventory Management
    2. 2. Requested Agenda <ul><li>Basics of Inventory management (with some real world perspective) </li></ul><ul><li>The world of startups- what worked, what didn't </li></ul><ul><li>What might you do differently -with or without 20/20 hindsight </li></ul><ul><li>What are the opportunities today </li></ul>
    3. 3. Outline <ul><li>Supply Chain terminology </li></ul><ul><li>Inventory as a component of landed cost </li></ul><ul><li>Supply chain issues are different for mfrs, wholesalers and retailers </li></ul><ul><li>Why is inventory management important? </li></ul><ul><li>The balancing act between inventory and service level </li></ul><ul><li>Safety stock </li></ul><ul><li>The push and pull of inventory management </li></ul><ul><li>Three types of demand </li></ul><ul><li>The forecast and the replenishment plan </li></ul><ul><li>Collaboration and multi-echelon (a solution for the bull whip effect) </li></ul>
    4. 4. Outline (cont.) <ul><li>The early days of Evant with some 20/20 hindsight </li></ul><ul><li>What are the opportunities tomorrow </li></ul><ul><li>Potential fundamental changes in the wine and sprits industry, (the Dell model) </li></ul>
    5. 5. Terminology Manufacturer Warehouses Retailers Consumers Wholesalers Suppliers Plants Value Chain Demand Chain (finished goods) Supply Chain Supply Chain For this class, this is the…..
    6. 6. Inventory is only one component of Landed Cost Manufacturer Warehouses Retailers Consumers Wholesalers Suppliers Plants + + = Landed Cost + Transportation Handling Inventory $ Product Cost
    7. 7. Comparing cost for current practices in Rx, Grocery and Foodservice (1996 dollars) Inventory Transportation Inventory Handling $2.36/case $1.83/bottle $3.33/case Transportation Inventory Handling
    8. 8. Inventory is only one component of Landed Cost Manufacturer Warehouses Retailers Consumers Wholesalers Suppliers Plants + + = Landed Cost + IMPORTANT In order to achieve lowest landed cost, you must sub-optimize one or more of its components Transportation Handling Inventory $ Product Cost
    9. 9. Packaged Grocery = $2.36/case Cost per Participant $0.68 $0.32 $0.38 $0.31 $0.27 $0.40 The trading partners sometimes have conflicting objectives
    10. 10. Inventory is only one component of Landed Cost Manufacturer Warehouses Retailers Consumers Wholesalers Suppliers Plants + + = Landed Cost + Our focus today Transportation Handling Inventory $ Product Cost
    11. 11. Why is inventory management important? <ul><li>P&G Study with Large grocery retailer </li></ul><ul><ul><li>Fastest selling 2000 products </li></ul></ul><ul><ul><li>800 stores </li></ul></ul><ul><ul><li>6 months manual count at each store each day </li></ul></ul><ul><li>Objective was to determine the level of store shelf out of stocks and the resulting impact </li></ul>
    12. 12. 250 260 270 280 290 300 310 320 330 340 350 360 Out of Stocks for top selling 2000 UPCs Number of OOS Items per Store (Weekly profile) Sun Mon Tue Wed Thur Fri Sat Sat 13.8% 17.8% Sat 12pm Sun 12am Sun 12pm Mon12am Mon 12pm Tues 12am Tues 12pm Wed 12am Wed 12pm Thur 12am Thur 12pm Fri 12am Fri 12pm Sat 12am
    13. 13. <ul><li>Revenue loss to retailers 11% + of sales </li></ul><ul><li>Most customers finding an Out of Stock spend at another store or not at all </li></ul><ul><li>Same brand substitution recovers less than 25% of OUT of STOCKS for manufacturer </li></ul>Impact of Out of Stock Events
    14. 14. How the shareholders benefit by solving this problem Suggest reading Chapter 3, Cash is King
    15. 15. McKinsey Valuation Premise <ul><li>Market Valuation is driven by: </li></ul><ul><ul><li>Return on Invested Capital (ROIC) </li></ul></ul><ul><ul><li>Rate of Sales and Earnings growth </li></ul></ul><ul><li>Strategy for the future </li></ul><ul><li>Quality of management </li></ul>
    16. 16. ROIC Operating Earnings Invested Capital = ROIC Approach to Value Analysis (Return On Invested Capital)
    17. 17. Relationship between Market Value, ROIC and Earnings growth For S&P 500 over six yr period 1.5 1.8 1.7 (*) (*) 1.7 1.6 2.1 1.9 (*) 1.5 1.6 2.0 2.9 3.6 1.3 1.8 (*) 2.0 1.8 1.7 2.3 2.8 3.1 4.0 (*) 3.6 5.1 5.5 5.3 (*) 5 or fewer companies ROIC - Cost of Capital Average Sales growth <-5% -5% to -2% -2% to +2% 2% to 5% > 5% <3% >15% 12%-15% 9%-12% 6%-9% 3%-6% Ratio of market value to book value Current New
    18. 18. Projected Benefit for large Rx Retail Chain Total = $1.2 billion in cash flow * Based on revenue growth rate of 14%.
    19. 19. Company with 50 DOS going to 30 DOS (with 30 days payment terms) Day of Supply What percent of capital tied up in inventory has been freed up? 50 DOS 30 DOS Payment terms 100%
    20. 20. Company with 50 DOS going to 25 DOS (with 30 days payment terms) Day of Supply What percent of capital tied up in inventory has been freed up? 50 DOS 25 DOS
    21. 21. Company with 50 DOS going to 25 DOS (with 30 days payment terms) Day of Supply How much of the inventory capital has been freed up? This 5 DOS is capital obtained for free, meaning, growth will generate more and more free cash. 100% + 5 DOS 50 DOS 25 DOS Payment terms
    22. 22. What happens to our ROIC if we can achieve negative working capital?? ROIC Operating Earnings Invested Capital = ROIC Approach to Value Analysis (Return On Invested Capital)
    23. 23. Fundamentals of Inventory Management
    24. 24. Why do we need more than one day of inventory? Supply Demand <ul><li>Order/Delivery </li></ul><ul><li>frequency </li></ul>
    25. 25. Effect of order/delivery frequency on inventory inventory time Order/Delivery frequency
    26. 26. Can our Inventory go to Zero? Supply Demand - Partial deliveries - Late deliveries - Variability of demand <ul><li>Delivery </li></ul><ul><li>frequency </li></ul>zero
    27. 27. Example #1 of Variable Demand Demand Low variability of demand
    28. 28. How do we cover for the variability of demand and supply? inventory time Delivery frequency Safety stock
    29. 29. Example #2 of Variable Demand Demand High variability of demand
    30. 30. How do we cover for the variability of demand and supply? inventory time Delivery frequency Safety stock
    31. 31. Relationship of Safety Stock to Service level Service level Safety Stock 60% 99.9% Infinite low
    32. 32. The Inventory Management Balancing Act Service Levels Inventory Levels Balancing Act CFO says… too much Inventory Marketing says… too many “out of stocks” High High Low Low
    33. 33. Some products are: pulled by demand, some are pushed <ul><li>Pushed per a plan </li></ul><ul><ul><li>New products </li></ul></ul><ul><ul><li>Short lifecycle products </li></ul></ul><ul><ul><li>Promoted products </li></ul></ul><ul><li>Pulled by Demand </li></ul><ul><ul><li>Consumables </li></ul></ul><ul><ul><li>Pushed products, following the initial push </li></ul></ul>
    34. 34. The components of Total Demand Turn Promotion & New products Short life cycle Requirements based on forecast of Pull Requirements based on a Push plan Total raw Demand
    35. 35. What do we do once we know Total Raw Demand? Turn Promotion & New products Short life cycle Requirements based on forecast of Pull Requirements based on a Push plan Total Raw Demand Replenishment Plan
    36. 36. What is the objective of the Replenishment Plan?? The right quantity in the right place at the right time to achieve the lowest landed cost Manufacturer Warehouses Retailers Consumers Wholesalers Suppliers Plants Transportation Handling Inventory $ Product Cost + + = Lowest Landed Cost +
    37. 37. Considerations for the replenishment plan Manufacturer regional Warehouses Stores Wholesalers & Retail Distr. Ctrs. Plants Truck loads pallets in Truck loads cases and eaches
    38. 38. The Pampers Bullwhip Forecast of Consumer demand Forecast of store demand Forecast of DC demand Forecast of Regional demand Forecast of Plant demand Variability of demand Manufacturer Warehouses Retailers Consumers Wholesalers Suppliers Plants
    39. 39. The Multi-echelon solution One Forecast of Consumer demand Manufacturer Warehouses Retailers Consumers Wholesalers Suppliers Plants Plan for store replenishment Plan for DC replenishment Plan for Regional replenishment Plan for Plant replenishment Variability of demand Replenishment plans
    40. 40. The early days of Evant and some 20/20 hindsight
    41. 41. Opportunity (events of 1993) <ul><li>Wal-Mart announcement </li></ul><ul><ul><li>entering the grocery business </li></ul></ul><ul><ul><li>objective to take 10% market share by 2000 </li></ul></ul><ul><ul><li>largest Grocery Chain had 6% market share </li></ul></ul><ul><li>Grocery Industry initiated major study (ECR) </li></ul><ul><ul><li>how to compete with Club stores and Wal-Mart </li></ul></ul><ul><li>FYI...Wal-Mart’s grocery market share as of: </li></ul><ul><ul><li>1993…. 0% </li></ul></ul><ul><ul><li>1995…..6% </li></ul></ul><ul><ul><li>2001…..10.3% (+ Sam’s Club) </li></ul></ul><ul><ul><li>2003…..16% (including Sam’s Club) </li></ul></ul>
    42. 42. Plant Mfr. Regional Stores Plant Whse Retail/Wholesale DC Over flow Whse 60% 40% 25% Packaged Grocery Total days = 104 Cases handled 6 times Transported 1000 miles Total cost/case = $2.36
    43. 43. ECR Report Findings (Efficient Consumer Response) <ul><li>Costs can be reduced by $30 billion per year </li></ul><ul><li>$17 billion per year in replenishment </li></ul><ul><li>Two phase plan to get there </li></ul><ul><li>Watered down by each set of participants trying to protect their position (ie VMI/CRP) </li></ul>
    44. 44. NONSTOP Logistics Vision Plants Mfr. Whse Distr . Center Stores 38 Sort and Load Centers “ Cut Replenishment cost in half” or
    45. 45. Value Chain = Supply Chain + Demand Chain Suppliers Plant Mfr. Whse Distr . Center Consumer Store Wholesale or Retail Value Chain Supply Chain Demand Chain finished goods 146 days for Rx Optimized = 55 days 104 days for CPG Optimized = 61 days
    46. 46. Original Investors & Partners <ul><li>Individual Investors $1million </li></ul><ul><li>Transportation </li></ul><ul><ul><li>JB Hunt $1million </li></ul></ul><ul><ul><li>Schneider National $1million </li></ul></ul><ul><li>Warehousing </li></ul><ul><ul><li>Excel $1million </li></ul></ul><ul><ul><li>GATX $1million </li></ul></ul><ul><li>Frozen food </li></ul><ul><ul><li>Americold $1million </li></ul></ul><ul><li>Data (promotional) </li></ul><ul><ul><li>AC Neilsen $1million </li></ul></ul>
    47. 47. Reception by Industry <ul><li>Manufacturers very receptive even though they paid the fees </li></ul><ul><li>Retailers slow to adopt even though little or no cost to them and had largest portion of savings (I’ll be second and suspicious of something for nothing) </li></ul><ul><li>Wholesalers confused (friend or foe??) </li></ul>
    48. 48. When & Why the Strategy changed <ul><li>First Sort & Load Center was opening Aug-95 </li></ul><ul><li>$12 million funding term sheet signed for closing on June 27th 1995 </li></ul><ul><li>18 of top 30 CPG Mfrs had agreed to be part of start up </li></ul><ul><li>First week of June, large wholesaler sends out a letter to the Mfrs </li></ul><ul><li>By June 9th all but 6 Mfrs had decided to wait …..Lead investor backed out of funding. </li></ul>
    49. 49. Grocery Industry Validations
    50. 50. New Business Model --- 1996 (software or service???) <ul><li>Provide a “bolt on” optimization service </li></ul><ul><li>Fees based upon business results </li></ul><ul><li>Sell business value to CEO/CFO </li></ul><ul><li>Develop interfaces to popular procurement systems and co-market (SCS partnership) </li></ul><ul><li>Find a Tier One VC lead investor (KPCB) </li></ul>
    51. 51. The final business model <ul><li>Move from Service model to Software license model </li></ul><ul><li>Acquire added functionality needed and develop platform independent offering </li></ul><ul><li>Recruited experienced “software” management team </li></ul><ul><li>Build a software company that “owns” its market segment </li></ul><ul><li>Become the system of record for retailers for all product data </li></ul>
    52. 52. Evant will provide extensive retail merchandising functionality Front office Customer management 12 applications Fulfillment WMS and Transportation 12 applications Ops Support Financials & HR 9 apps Evant Retail Merchandise Management [ Store ][ Catalog ][ Web ] 16 applications and “merchandise system of record” &quot;Evant: A Multi-channel Merchandise Management Application That's Worth the Wait --- AMR Research Evant's vision is to enable flexible, effective cross-channel Merchandise Planning and Execution Retail IT Requirements
    53. 53. Gaining Traction with Customers (recognized plus deferred) Notes: Excludes Hammaccher Revenue in 2001 $400K $27 mill $5.2 mill $11.8 mill $18.8 mill
    54. 54. Retail Customers
    55. 55. Distributors and Manufacturers
    56. 56. What are the opportunities today?
    57. 57. What is needed to optimize the supply chain?? Manufacturer Warehouses Retailers Consumers Wholesalers Suppliers Plants Integrated software to convert this data into actionable plans for each trading partner Transportation options, cost, status, time Handling options, cost, time, status Inventory amount, value, purpose, status $ $ Product cost options $ Base price projections Manufacturer promos & new products Retailer promotions
    58. 58. What are the opportunities tomorrow? <ul><li>RFID and/or other visibility solutions combined with replenishment plans </li></ul><ul><li>Real-time business systems </li></ul><ul><li>Shared solutions hosted by third parties </li></ul>
    59. 59. Current Retail Business Model for wine Store Consumer Example of $25 bottle at retail Producer Producer shared DC Distributor DC Retailer DC Cost/Sell $3 $12.5 $16.67 $16.67 $25 Margin $9.50 $4.16 $6.25 Margin % 76% 25% 33.4% Days of Inv months to yrs 45 45 45 $ carry 45days $0.04 $0.15 $0.21 $0.21 EBIT (5%) $1.25 EBIT (4%) $0.67
    60. 60. Current Retail Business Model Store Consumer Buy/Sell $3 N/A $12.5 $18.75 N/A $25 Margin $9.50 N/A $4.16 $8.34 Margin % 76% 25% 33.3% Days of Inv 45 45 45 $ carry 45days $0.04 $0.15 $0.21 $0.21 EBIT (5%) $1.25 EBIT (4%) $0.67 EBIT increase $0.12 % increase 17.6% Example of $25 bottle at retail Producer Producer shared DC Distributor DC Retailer DC
    61. 61. Current Retail Business Model Store Consumer Buy/Sell $3 N/A $12.5 $18.75 N/A $25 Margin $9.50 N/A $4.16 $8.34 Margin % 76% 25% 33.3% Days of Inv 45 45 45 $ carry 45days $0.04 $0.15 $0.21 $0.21 EBIT (5%) $1.25 EBIT (4%) $0.67 EBIT increase $0.12 $0.17 % increase 17.6% 13.5% Example of $25 bottle at retail (inventory impact) Producer Producer shared DC Distributor DC Retailer DC
    62. 62. New Vine Retail Business Model Store Consumer Buy/Sell $3 $12.5 N/A $25 Margin $9.5 $11.25 Margin % 76% 45% New Vine fee $1.25 Margin increase $5.00 Inventory saving $0.15 EBIT before $1.25 EBIT after $4.16 EBIT increase 3.33X Example of $25 bottle at retail (price +inventory impact) Producer Producer shared DC Distributor DC Retailer DC
    63. 63. Thank you Homer Dunn founder 415 403-6768
    64. 64. Package Grocery finished goods(mfr + retailer) $2.36/case The trading partners sometimes have conflicting objectives

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