1. Wassenaar, June 1st 2010
Value Chain Excellence in Retail
IG&H perspective on making the value chain really work
© IG&H Consulting & Interim

2. IG&H survey: “Value Chain Mirror” helps retailers
making their value chains really work
Value Chain Mirror Scoping - Retail Consumer industry
Supplier Supplier Supplier
VC Partners - Mirror
Brand
Retailer
Shop Shop Shop Shop Shop
First year pilot - Fashion Industry
VC Capabilities - Mirror
Category Supply Chain
Mgmt Mgmt
In-season
Management
© IG&H Consulting & Interim, Woerden – The Netherlands 2010 Elsevier Retail Summit 2010 2

3. IG&H survey: “Value Chain Mirror” helps retailers
making their value chains really work (II)
Context Approach & scope
 IG&H commitment towards retail excellence  Interviews & case studies per participant
 Changing market demands (in the rebound)  Cross participant findings at Retail Summit
 Value Chain alignment becoming differentiator  Netherlands based / European scope
 Annual survey - first year: Fashion deep dive
Objective  Core topics:
 How to make value chain excellence really work  Category Management
 Derive key success factors, beyond the obvious  Supply Chain Management
 Show a mirror and help participant to next level  In season / markdown management
Deliverables
 In-depth analysis & benchmark of participant’s
level of Value Chain excellence
 Analysis of processes & value chain alignment
 Strategical planning process
 Tactical planning process
 In season execution
 Report and feedback session
 Concrete recommendations & “Get-to-work list”
© IG&H Consulting & Interim, Woerden – The Netherlands 2010 Elsevier Retail Summit 2010 3

4. Value chain leadership: Still enormous potential for
increased consumer value and reduction of waste
Consumer Value....
 Always a reason to go the store
 Inspiring & fitting garments
VALUE
 Never disappointments in store
 Available, easy to find
 Good price/quality balance
 Good service
Waste....
 Excessive markdowns
 Shrinkage
WASTE
 Stock-outs
 Quality issues
 Cost loading, inefficiency
© IG&H Consulting & Interim, Woerden – The Netherlands 2010 Elsevier Retail Summit 2010 4

5. Value chain excellence: Excellence is “market alignment”
AND “excellent execution” .... at the right level
Value chain excellence
How will YOU compete?
“Value chain
leader”
2. Excellent “Supply Chain 3. Move to
execution responsive”
next level
“Market
driven”
“Having the
basics right”
1. Market
alignment
© IG&H Consulting & Interim, Woerden – The Netherlands 2010 Elsevier Retail Summit 2010 5

6. Value chain excellence: Retail DNA makes value chain
excellence inherently challenging
Main difficulties
What’s YOUR challenge?
“Value chain
leader”
Lack of direction Poor execution Little perseverance
 Unclear value chain  IT/outsourcing as  Leadership not
“Supply-chain vision the (wrong) answer involved
responsive”
 Value chain partners  Top-down  Failure to empower
not aligned programme line management
 Competence gaps  Resistance to  Lack of ownership
“Market not recognized change  ...
driven”  Quick-win view  ...
 ...
“Having the
basics right”
© IG&H Consulting & Interim, Woerden – The Netherlands 2010 Elsevier Retail Summit 2010 6

7. Vision & direction: Commit value chain leadership
towards a “True North” consumer driven vision
Success factors
Vision & direction
True North
 Develop “true north” consumer Vision
experience and commit internal and
external Value Chain leaders
 Define realistic time path  European fashion retailer:
Consumer-back vision on fast fashion
 Fully understand competencies to model (continuous source of reference)
deploy, internally and at key partners  European food retailer:
New value-chain innovation role separated from day-
to-day retail execution
 Make key changes in VC operating  Global coffee retailer:
model - prior to implementation Vision on sustainability required supplier collaboration
to reduce “value-chain footprint”
 Structure strategic value chain partner  Leading Dutch department chain:
Buyer-planner organisation support fast-fashion vision
relationships upfront
 Leading home improvement retailer:
Easy-to-shop principles translated to accelerate
 Provide clear implementation principles assortment/merchandise renewal
© IG&H Consulting & Interim, Woerden – The Netherlands 2010 Elsevier Retail Summit 2010 7

8. Robust processes: Help the line, step-by-step,
build processes and deliver value at (web-)store level
Success factors
Robust processes Build
robust
 Start bottom up, in the store, know the processes
customer
 First successes: create enthousiasm
 Real focus on customer value -  DIY retailer:
relentless elimination of waste Developing new category mgmt process  talked to
2000 consumers , in store, to analyse decision tree
 Multi-country shoe retailer:
 Focused and pragmatic step-by-step Implementation of Smart buying (simple process &
changes: few at a time, speed will come tools, small steps
 Leading food retailer:
 Line-driven, with continued senior Clear definition and implementation of meaningful
category captain roles
involvement - not a staff/project activity  European Fashion retailer:
Long term relationships with all value chain partners to
 Involve value chain partners: open amintain extremely flexible supply chain and smart
mix of worldwide and regional production facilities
dialogue, become excellent together
© IG&H Consulting & Interim, Woerden – The Netherlands 2010 Elsevier Retail Summit 2010 8

9. Clockwork: Empower line management to build
continuous improvement culture
Success factors
Clockwork
Build
 Develop and implement new value clockwork
chain capabilities (embedded in
training)
 Continuous improvement of processes
with trust based partnerships
 Fashion retailer:
Central corporate value : “Next time we do it better” +
 Spend >80% of the time in the store, fashion retailer training academy
in the market for new opportunities  Leading global fashion retailer:
Continous alignment during design process in
combined teams (design + sourcing + product dev.)
 Operational management - visualisation  Leading global food retailer:
at all levels (consumer data) Senior management leads through active presence in
store
 Performance management and clear  Sports goods manufacturer and retailer:
Markdown management teams analysing day-to-day
standards results
© IG&H Consulting & Interim, Woerden – The Netherlands 2010 Elsevier Retail Summit 2010 9

10. Value chain excellence: A value chain improvement
approach that builds on retail DNA
Value chain excellence
What’s YOUR value chain DNA?
Next
Value chain
Level
Small steps Implement
to change clockwork
Build
robust
processes
True North
vision
Current
value chain
level
3 year horizon
© IG&H Consulting & Interim, Woerden – The Netherlands 2010 Elsevier Retail Summit 2010 10

11. Retail summit 2010: Do’s and Don’ts to achieve
excellence reflect retail DNA
DON’T (conflicts with retail DNA) DO (builds on retail DNA)
1. Holistic vision / current operating 1. True north consumer driven view, change
model operating model
2. Big ambitions – next quarter delivery of 2. Vision driven – but gradual clockwork
results building approach
3. Top-down improvement programmes 3. Bottom-up, from the store, line-driven
(HQ driven) approach
4. Senior management delegates 4. Senior management fully involved in
execution execution - makes it highest priority
5. Stay locked into competitive 5. Work with value chain partners to
bidding/tendering trap improve and create value
6. Centralise decision making, based on 6. Empower category and store managers
numbers and facts to make decisions
7. People in the store and DC’s are a cost 7. New contract with employees who
pool subscribe to retail excellence
© IG&H Consulting & Interim, Woerden – The Netherlands 2010 Elsevier Retail Summit 2010 11

12. Wassenaar, June 1st 2010
Value Chain Excellence in Retail
IG&H perspective on making the value chain really work
© IG&H Consulting & Interim

13. IG&H: 150 professionals making strategy work - Combining deep
industry know-how with the ability to put strategy into execution
IG&H Retail Menu Recent client experiences
Strategy
 Multi-format, multi-country
sourcing implementation
Format differentiation
 Category, merchandise
(Lean) Retail Service Excellence strategy and implementation
Marketing effectiveness/ROI  Cost to serve / supply-chain
model optimization
Operations
Markets
Category management 2.0
 Lean implementation within
Margin Catalyst a large national retailer
Supply Chain Management & Logistics  Service excellence
programme
Supplier value - Smart buying
 E-fulfillment strategy and
Retail Sustainability
solution development
 Promotion/price effectiveness
Execution
review (margin catalyst)
© IG&H Consulting & Interim, Woerden – The Netherlands 2010 Elsevier Retail Summit 2010 13