On-shelf availability: approaches and solutions
The critical need to improve on-shelf availability will be highlighted and a collaborative approach to delivering results will be presented. Case studies will show how multifunctional teams and benchmarking were used to design new logistical processes and in-store routines. For senior managers who oversee categories and operations, this will provide solutions that address availability issues facing their customers.
Speakers: Saeed Anslow, Mark Ibbotson, Asda Wal-Mart; Bernd Krause, L’Oréal; Dr Paul Chapman, University of Oxford; dm-drogerie markt, Unilever. Facilitated by University of Oxford.
These slides were presented at the Sustainable Brands London 2013 Conference, to view the associated video or listen to the audio of the presentation please visit http://www.sustainablebrands.com/digital_learning/brand_innovation/if-products-could-talk-innovation-value-chain
As a full-service B2B agency, we're no strangers to complicated.
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We call this Extracting the Extraordinary.
Through this approach, we simplify the complex, craft compelling creative and deliver results.
These slides were presented at the Sustainable Brands London 2013 Conference, to view the associated video or listen to the audio of the presentation please visit http://www.sustainablebrands.com/digital_learning/brand_innovation/if-products-could-talk-innovation-value-chain
As a full-service B2B agency, we're no strangers to complicated.
We go further and dig deeper to truly understand our clients' business. Cutting through the noise to identify the unique, the unusual and the stimulating.
We call this Extracting the Extraordinary.
Through this approach, we simplify the complex, craft compelling creative and deliver results.
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ECR Europe Forum '08. On-shelf availability: approaches and solutions
1. Delivering Availability:
Fulfilling consumer wishes
better, faster and at less cost
Breakout 3.3 OSA
ECR Europe Congress
Berlin
Wednesday 28th May 2008
2. Session Overview
• OSA – an overview
• ASDA and Unilever – Theatre and Factory
• L’Oreal and dm-drogerie markt
• P&G – Winning at the first moment of
truth
3. OSA – an overview
Dr Paul Chapman
Oxford University
Saïd Business School
4. Saïd Business School
Europe’s newest and fastest growing business school.
Known for faculty expertise in specialist areas, including retail
management.
Develops business leaders by providing a complete range of
academic activities. Recent executive education clients include:
Metro; Sainsbury’s; L’Oréal
Conducts research not only into the nature of business, but the
connections between business and the wider world.
5. OSA – An Overview
• Status:
– OSA remains a key challenge across Europe to fulfilling
customers wishes.
– Solutions prove elusive or temporary with out-of-stocks
quickly returning.
• Underlying issue:
– Availability is not a simple problem that can be addressed
through seeking and implementing ‘best practice’.
– OSA cuts across functional and organisational boundaries so
needs to be viewed as a “complex problem”.
• Way forward:
– Few prescriptive answers are available to solve complex
problems. Instead a collaborative approach is required to
identify and implement specific solutions.
6. On Collaboration
“creating new value together” (Kanter, 1994)
“(1) The pooling of appreciations and/or tangible resources,
e.g. information, money, labor, etc.
(2) by two or more stakeholders
(3) to solve a set of problems which neither can solve
individually.” (Gray, 1995)
“ … collaboration is at the same time the most used, the most
frequently misunderstood, the most popular - and the most
disappointing strategy that has come along to date.”
(Daugherty et al, 2006)
7. Collaboration requires alignment
“creating new value together” (Kanter, 1994)
Strategy Strategy
Culture Culture
Operations Operations
“(1) The pooling of appreciations &/or tangible resources, e.g. information, money, labor, etc.
(2) by two or more stakeholders
(3) to solve a set of problems which neither can solve individually.” (Gray, 1995)
8. “The pooling of appreciations and/or tangible resources”
R
S
S R
Limited to sales Extended across
and buying many functions at
both organisations
Source: after Payne, A., Christopher, M., Clark, M. and Peck, H. (1995)
Relationship Marketing for Competitive Advantage. Oxford: Butterworth Heinemann
10. “creating new value together”
S R
1) Shared goals …
2) … delivered through co-created solutions …
3) … enabled by an intimate understanding of each other’s businesses
11. Theory into practice, using the ECR Roadmap …
Corporate Policy
6. Evaluate 1. Plan
5. Implement 2. Map & Measure
4. Develop Solutions 3. Analyse
13. Session Overview
• OSA – an overview
• ASDA and Unilever – Theatre and Factory
• L’Oreal and dm-drogerie markt
• P&G – Winning at the first moment of
truth
14.
15. Asda and Unilever
Theatre and Factory
Collaboration
Saeed Anslow
Asda
Head of Availability - Retail
Rebecca Close
Unilever
Supply Chain Innovation Manager
16. Theatre and Factory
2nd Largest Retailer in UK Operate in 23 categories,
342 shops, 26 depots World No. 1 in 7 categories
165,000 colleagues Operate in 150 countries
15 million customers/wk 220,000 employees
Lowest Price Supermarket “Live Service, Deliver
for 10 years Growth”
17. ASDA - Approach
• Phase 1 (07/08) “Always Different”
– Academic support using ECR roadmap
– Asda cross functional team
– One best way
– Short term horizons
• Change Office
• Dedicated Project Team
18. ASDA– Opportunities Phase 1
• Separate out factory from theatre
• Exploit Wal*Mart innovations
• Availability a business priority
• Supplier collaboration
19. ASDA– Solutions (Phase 1 Examples)
•On Shelf Customer Availability Measure
•New Operating Model - “Trailer to Shelf”
– Health & Beauty
– General Merchandise
– Music Video & Games (MVG)
•One Best Way - Implementation
20. On Shelf Customer Availability (OSCA)
• Corporate Epos based measure
• Launched April 2008
• Replaces 3rd party measure
• Daily availability measure
• 70+ Categories
22. One Best Way – Replenishment Example
PRIORITY FILL 22:00 - 06:00 : NIGHT REPLEN COLLEAGUE
o Work all delivery directly from blue o Clean, tidy & face-up o Rack away all overstocks by
totes o Fill promo ends/sideframes commodity in the BOH
o Do not work overstocks o Return overstocks to BOH o Ensure TUC codes on outer packaging
face outwards
23. ASDA - Store Implementation
Store Of Learning
What a Good Job Looks Like
24. Evaluation
Health & Beauty General
Merchandise
Stockholding 20% reduction 20% reduction
Availability 35% reduction 31% reduction
(On Shelf
Gaps)
OSA +2% +2%
25. ASDA – Phase 2 (08-10) “Always Brave”
• Collaboration
• Factory approach
• Continuous Improvement
• Long term horizons
28. A relationship that has grown
Asda/ Unilever Global Journey
UK Journey
40 pilots
Project Pocket
OSA Improvement >
98%
Project Poppy
Reduced Inventories
Project Sunlight
Increased Sales
Improved Morale
29. Phase 2: Asda and Unilever
Vision:
• Deliver a step change in OSA and improve
productivity
• Embed changes throughout both
businesses
• End-to-End Supply Chain optimisation
30. Asda and Unilever - What?
Health & Chilled Ambient Generic
Beauty
Apr –
Jun ‘08
Jul -
Aug ‘08
Sep -
Dec ‘08
‘09
34. “Be Brave”
Suppliers Trading Supply Distribution Stores Customer
Asda and Unilever
Sustainable improvement for the
Value Chain
35. Session Overview
• OSA – an overview
• ASDA and Unilever – Theatre and Factory
• L’Oreal and dm-drogerie markt
• P&G – Winning at the first moment of
truth
36. Delivery of make-up wall units
LEANER and FITTER
logistics concept for cosmetics setting
new standards
37. Content
Partners involved in the project
Facts and figures
Reasons for the project – the challenges
Targets
Procedure
Realization – the impossible became true
Results
38. Involved partners
•“Deutscher Handelspreis” for 2007 for excellent image and social engagement
•High level position at “Kundenmonitor 2007” as most popular retailer through clear
victory with different performance levels
•Victory among 19 retailers at “Qualitätsbarometer” of research institute PULS
•Ranking-position at retail brands 2007 of the BBDO Consulting; classification as retail
brand which provides the highest benefits
39. Involved partners
Turnover 2007: 180 Mio. €
Branches: 20 national, 3 international
Employees: 1.600
Capacity: 350.000 qm logistics&service area
200 vehicles/trucks
A modern and innovative company, multiple
awarded
Worldwide activities
Wide performance range from procurement to
production replenishment and all typical logistics
outsourcing activities
40. A multichannel pure player in beauty
Channels Brands
Professional
Food, Drug and Mass
Parfumeries
and department stores
Pharmacies
The Body Shop
41. No.1 in Beauty
17.100
(in millions of euros) 15,790
14,533 + 8.0 %
13,641
+ 8.7 %
+ 6.5 %
2004 2005 2006 2007
7
42. Facts and Figures
16,100 make-up unit walls in German retail for the
brands Maybelline and L’ORÉAL PARIS
Of them 1,900 at customer dm-drogerie markt
256 wall unit in 2007 for new stores, re-opening or
change at dm
43. Reasons for the project –
the occasional challenges
Missed deliveries of one part (products or unit-wall)
Support of the store-staff was necessary
Damaged, missing and lost products
Make-up area partly inaccessible
Pick-up of the no longer needed make-up wall in separate step
A lot of interfaces and complex communication control and high costs
Out of Stocks
Lost turnover
Inconvenience for consumers and staff
44. Reasons for the project –
the permanent challenges
Separate delivery of products and wall unit
Installation and replenishment of the wall-unit l in a separate step
by a merchandiser
Duration 4 – 5 hours
Excessive waste material
A lot of interfaces and complex communication,control and high costs
Inconvenience for consumers and staff
45. Process overview before re-organisation
L‘ORÉAL Forwarder Merchandiser dm-store
B Delivery Transport Delivery
E Wall unit Wall unit Wall unit
F Delivery Transport Delivery
O Products Products Products
R Coordination Timing Installation,
E Merchandising Ressources Replenishment
46. Targets
Reorganisation of the complex supply chain with the
objective of being in the right place at the right time and
to prevent out of stocks
│ Reduction of interfaces and complexity
│ No inconvenience for consumers and staff
│ Avoidance of loss of sales
│ Cost optimization
47. Procedure
Extensive analysis of the behaviour of consumers and
staff during installation of a unit wall
Process- and cost analysis of the present process-
where are the problems and the cost drivers?
Clear requirement to the necessary performance of a
partner
Project team consists of members of the client, the
partner, sales, marketing, customer service and
logistics
During the project phase live tests of different solutions
at POS
48. Realization - Changes
│6 services from one hand
│Storage
│Due date control
│Replenishment
│Transport to POS
│Installation
│Reshipment of old unit-wall
Reduction of interfaces and workload for communication
and control
49. Realization - Process overview after re-organisation
L‘ORÉAL Forwarder Merchandiser dm-store
B Delivery Transport Delivery
E Wall unit Wall unit Wall unit
F Delivery Transport Delivery
O Products Products Products
R Coordination Timing Installation,
E Merchandising Resources Replenishment
L‘ORÉAL Hegele dm-store
A Delivery control,
Storage and completion
F Delivery,
Delivery Wall unit,
Products Replenishment
T Packaging
Installation
E Transport
R EDI-DESADV
51. Results
Unique in the market
Integrated logistics-concept with EDI-DESADV
Concentrated transportation
No inconvenience for consumers and staff
No interruption of sales
Reduction of costs by 20% and OOS-level by 50%
Roll-Out through customer to his 6 other make-up
suppliers in October 2006
Win-Win-Win Situation
53. Session Overview
• OSA – an overview
• ASDA and Unilever – Theatre and Factory
• L’Oreal and dm-drogerie markt
• P&G – Winning at the first moment of
truth
55. Progress
% of Customer / Category Combinations
where out of stocks are greater than 5%
42%
30%
FEB 2003 FEB 2008
56. A Typology of Shelf Out of Stocks
Shelf Out of
Stocks
Un- Information
Product not Store
planned / Data
Supplied Demand Operations
Errors
% % % %
Conventional approach
57. Where to Start….
Shelf Out of
Stocks
Un- Information
Product not Store
planned / Data
Supplied Demand Operations
Errors
Conventional approach
Shelf Backwards approach
58. The improvement process starts from the shelf
• Inconsistent demand is a root cause of
service level failures
• Understanding the process from the shelf
backwards identifies how to remove the
opportunity for failures
• By engaging the right stakeholders from
the start, results can be delivered quicker
60. Call to Action
Lost sales Additional Costs
• Store / brand switching • Damaged product
• Trade up / regimen • Additional inventory
• New stores • Additional labour
• Wasted transport
• etc
Sales opportunity = $ Cost opportunity = $
Scope:
61. Engage and involve the right stakeholders
• Store Operations
• Store & Backroom design
• Logistics & Distribution
• Human Resources & IT
• Sales, Marketing & Buying
• Loss Prevention
• Store Process Improvement /
Audit
• etc
62. Learn to see – go on a journey together
• Follow products
• Identify failure points
• Analyse root causes
• Brainstorm solutions
• Prioritise
63. Deliver results….
25%
22%
20% 18% Out of Stock Rate
14%
15%
10% 8%
5%
5% 3%
0%
Base Line Create Fix the Joint Root Cause Embed /
2001 Awareness Basics Engagement & Action New Metrics
2002 2004 Planning 2007
2005
64.
65. Change in P&G scheduling helped lead to same
day delivery to store and 1 less days inventory
66. Clearer labelling on orders for split cases has
speeded up checking and reduced errors
67. Takeaways
• OSA needs to be linked to corporate objectives and a joint
“size of the prize” agreed
• Speed up the improvement rate by starting at the shelf and
working backwards
• Engage and involve all the right people from the very
beginning
• Go on the journey together, follow the products back up the
supply chain, find and remove opportunities for failure
• Establish new metrics to hold the gains
68. Session Overview
• OSA – an overview
• ASDA and Unilever – Theatre and Factory
• L’Oreal and dm-drogerie markt
• P&G – Winning at the first moment of
truth
69. In summary
• Status:
– OSA remains a key challenge across
Europe to fulfilling customers wishes.
– Solutions prove elusive or temporary with
out-of-stocks quickly returning.
• Underlying issue:
– Availability is not a simple problem that
can be addressed through seeking and
implementing ‘best practice’.
– OSA cuts across functional and
organisational boundaries so needs to be
viewed as a “complex problem”. S R
• Way forward:
– Few prescriptive answers are available to
solve complex problems. Instead a
collaborative approach is required to
identify and implement specific solutions:
1) Shared goals …
2) … delivered through co-created solutions …
3) … enabled by an intimate understanding of each
other’s businesses