![[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Yet today’s Supply Chain is STILL filled with waste…. The case for change The Case for Change](data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7)
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- 1. New Ways of Working Together Pat Conklin, Chief Customer Officer, Procter & Gamble- Asia The light bulb was not invented from continuous Innovation of a Candle DRAFT V-9 July 2010
- 3. “ Stores are over SKU’d” New SKUs Registered Average Items in a Typical Supermarket Source: Global Commerce Initiative New Ways of Working Together 1980 2,899 2005 10,651 2007 85,000 1987 24,500 1997 30,000 2007 45,000 The Case for Change
- 4. Inventories are too high “ There is too much of the stuff consumers don’t want and not enough of what they do.” The Case for Change
- 5. Out-of-stocks persist The Case for Change
- 6. Trading partners continue to focus on business minutiae instead of shoppers The Case for Change
- 8. The industry must Develop New Ways of Working Together Trading Partners must more readily and freely Share Information In their Bi-Lateral relationships The industry must Redefine the 2016 Value Chain
- 9. Brenda C. BARNES Chairman & Chief Executive Officer SARA LEE CORPORATION Warren F. BRYANT Chairman NATIONAL ASSOCIATION OF CHAIN DRUG STORES Jean-Paul AGON Chief Executive Officer L’OREAL Eckhard CORDES Chairman of the Management Board & Chief Executive Officer METRO AG Colleen GOGGINS Worldwide Chairman, Consumer Group JOHNSON & JOHNSON Bob MCDONALD Chairman, President & Chief Executive Officer THE PROCTER & GAMBLE COMPANY Sir Terry LEAHY Chief Executive Officer TESCO PLC Stefano PESSINA Executive Chairman ALLIANCE BOOTS Paul POLMAN Chief Executive Officer UNILEVER New Ways of Working Together – A Consumer Goods Forum Initiative Lars OLOFFSON Chief Executive Officer CARREFOUR GROUP John RISHTON Chief Executive Officer Royal Ahold Mike DUKE President & CEO Wal*Mart Project Leaders Michael KOK Group CEO Dairy Farm Motoki OZAKI President Kao
- 10. Industry Track (Collaborate) New Ways of Working Together Eliminate supply chain disruptions, enable growth Trading Partner Track (Competitive Advantage) *Note: Utilizations of Industry Standards Best Practices/ Standards Documentation, Education, Communication Guiding Principles and Frameworks Share Results • Strategy Alignment • JAG Framework Focus on Consumer • Common Goals & Measures • Information Sharing* • EPC • Data Sync Connected Business Information • Knowledge, Skills & Capabilities • Incentives & Rewards • organisation Design Prepare People for New World • Sustainability • Cross Industry Integration • Integrated Supply Chain Share Our Supply Chain Strategic Issues Between Trading Partners Common Goals, Common Measures Specific Measures & Priorities Other Data Sharing Opportunities Consumer/ Shopper Satisfaction
- 11. Industry Track (Collaborate) New Ways of Working Together Eliminate supply chain disruptions, enable growth Trading Partner Track (Competitive Advantage) *Note: Utilizations of Industry Standards Best Practices/ Standards Documentation, Education, Communication Guiding Principles and Frameworks Share Results • Common Goals & Measures • Information Sharing* • EPC • Data Sync Connected Business Information • Knowledge, Skills & Capabilities • Incentives & Rewards • organisation Design Prepare People for New World • Sustainability • Cross Industry Integration • Integrated Supply Chain Share Our Supply Chain Strategic Issues Between Trading Partners Common Goals, Common Measures Specific Measures & Priorities Other Data Sharing Opportunities Consumer/ Shopper Satisfaction • Strategy Alignment • Joint Business Planning Focus on Consumer
- 13. Industry Track (Collaborate) New Ways of Working Together Eliminate supply chain disruptions, enable growth Trading Partner Track (Competitive Advantage) *Note: Utilizations of Industry Standards Best Practices/ Standards Documentation, Education, Communication Guiding Principles and Frameworks Share Results • Strategy Alignment • JAG Framework Focus on Consumer • Knowledge, Skills & Capabilities • Incentives & Rewards • organisation Design Prepare People for New World • Sustainability • Cross Industry Integration • Integrated Supply Chain Share Our Supply Chain Strategic Issues Between Trading Partners Common Goals, Common Measures Specific Measures & Priorities Other Data Sharing Opportunities Consumer/ Shopper Satisfaction • Common Goals & Measures • Information Sharing* • EPC • Data Sync Connected Business Information
- 15. Industry Track (Collaborate) New Ways of Working Together Eliminate supply chain disruptions, enable growth Trading Partner Track (Competitive Advantage) *Note: Utilizations of Industry Standards Best Practices/ Standards Documentation, Education, Communication Guiding Principles and Frameworks Share Results • Strategy Alignment • JAG Framework Focus on Consumer • Common Goals & Measures • Information Sharing* • EPC • Data Sync Connected Business Information • Sustainability • Cross Industry Integration • Integrated Supply Chain Share Our Supply Chain Strategic Issues Between Trading Partners Common Goals, Common Measures Specific Measures & Priorities Other Data Sharing Opportunities Consumer/ Shopper Satisfaction • Knowledge, Skills & Capabilities • Incentives & Rewards • organisation Design Prepare People for New World
- 16. Five Elements of Change? Prepare People for New World Change Vision Skills Measures / Rewards Resources Action Plan Change Skills Measures / Rewards Resources Action Plan Confusion Vision Measures / Rewards Resources Action Plan Anxiety Vision Skills Resources Action Plan Gradual Change Vision Skills Measures / Rewards Action Plan Frustration Vision Skills Measures / Rewards Resources False Starts
- 18. Industry Track (Collaborate) New Ways of Working Together Eliminate supply chain disruptions, enable growth Trading Partner Track (Competitive Advantage) *Note: Utilizations of Industry Standards Best Practices/ Standards Documentation, Education, Communication Guiding Principles and Frameworks Share Results • Strategy Alignment • JAG Framework Focus on Consumer • Common Goals & Measures • Information Sharing* • EPC • Data Sync Connected Business Information • Knowledge, Skills & Capabilities • Incentives & Rewards • organisation Design Prepare People for New World Strategic Issues Between Trading Partners Common Goals, Common Measures Specific Measures & Priorities Other Data Sharing Opportunities Consumer/ Shopper Satisfaction • Sustainability • Cross Industry Integration • Integrated Supply Chain Share Our Supply Chain
Notas do Editor
- I THINK THE RATIONALE IS PRETTY CLEAR, WE HAVE BEEN TALKING ABOUT „COLLABORATION“ FOR YEARS YET TODAY‘S SUPPLY CHAIN IS STILL FILLED WITH WASTE THAT IS BEING PASSED ON TO CONSUMERS AND OUR STAKEHOLDERS
- STORES ARE OVER SKU’D While this is US data and the numbers will be different by market, the trends are identical. Across Asia, the number of SKU’s available for retailers has grown exponentially.
- INVENTORIES ARE TOO HIGH
- OUT-OF-STOCK LEVELS ARE STILL UNACCEPTABLE The worldwide average is 8.3%, in Asia, we experience out-of-stock levels _______________________ .
- AND YET WE SPEND A DISPROPORTIONATE AMOUNT OF TIME FIXING DAY-TO-DAY PROBLEMS AND NOT ENOUGH TIME ADDRESSING THE NEEDS OF OUR CONSUMERS AND SHOPPERS
- A FEW YEARS AGO, THE (now) CONSUMER GOODS FORUM PRODUCED A COMPELLING LOOK AT THE FUTURE IN A REPORT CALLED “2016 – THE FUTURE VALUE CHAIN” Note: GCI was renamed the Consumer Goods Forum in 2009.
- The 2016 report, called out three things Trading Partners must do to serve our consumers better IN THE FUTURE. Trading Partners and on occasion, the industry collectively must Redefine the 2016 Value Chain , addressing new requirements of the physical flow of goods, driven by forces like volatile energy costs and a growing population density. Trading Partners must more readily and freely Share knowledge about the consumers we serve , embracing the concept that the best way to manage increasing complexity is through transparency. Trading Partners must Develop New Ways of Working Together – including sustainable changes in culture, collaborative business planning and new measures and rewards.
- I want to be clear, New Ways of Working Together in NOT a P&G thing. It is a framework for collaboration that has been developed and supported by The CONSUMER GOODS FORUM. The CONSUMER GOODS FORUM Board is composed of 50 of the worlds leading retailers and manufacturers, including Asian based companies like: AEON, AJINOMOTO, BEIJING HUALIAN, DAIRY FARM, IZUMIYA, KAO, KIRIN HOLDINGS, NTUC FAIRPRICE and WOOLWORTHS. These leaders are throwing their weight behind the idea that trading partners, and in some non-competitive cases, the industry as a whole, need to develop better ways to wrk together to meet the needs of our consumers and shoppers.
- Vertical partners should engage in bi-lateral collaboration develop a clear, fact-based understanding of market context and trends harmonize business strategies Embrace joint long-term planning sustained success will require more collaboration to drive mutual innovation decisions should be made by cross-functional teams partners should stretch the planning horizon beyond annual planning to a longer-term focus, to allow for capital investments – category growth With longer term business planning IP protection and trust will be essential Practice jointly agreed growth (JAG) establish long-term goals for category growth and a real roadmap for how to get there
- You may want to talk about the „service level as measured by our customers“ as an example of how we are trying to drive common goals and common measures. Trading Partner Performance Management Standards are new GS1 standards designed to create a common language for Key Performance Indicators like „days inventory“, orrer-delivery cycle time“, line or case fill - - so P&G speaks the same language as all other manufacturers and every retailer speaks the same language. Only than can we get down to solving the problems. ADD DATA ON ASIA USE OF EDI. Key Insights from 2009 Global Scorecard Analysis Companies who use EDI to transact their orders have 50% greater on-shelf availability than those using paper, phone, fax (4.9% OOS rate versus 9.6% OOS rate). There is a significant positive correlation between use of EDI for dispatch and receiving (Advanced Shipping Notice – ASN) advise and higher Service Levels / In-Stock . Companies who transact invoices electronically (EDI ) have significantly better invoice accuracy , less deductions and re-work. Retailers & Wholesalers with high use of Global Data Synchronization (GDSN) have significantly significant higher annual sales growth .
- More context: the Lippet Model suggest there are five elements that need to be in place in order for change to occur. There needs to be a clear VISION, people need the appropriate SKILLS, MEASURES and REWARDS need to reinforce the desired behaviour, you need adequate RESOURCES and there needs to be a defined ACTION PLAN. If any of that is missing – you’ve got a problem. If there is no clear VISION, the organisation gets confused. They are doing work, but not sure why. If there is a VISION, but people don’t have the right SKILLS, it creates a lot of anxiety. People know what they have to do but don’t know how to do it. If you have a clear VISION and adequate SKILLS but there is no reinforcing MEASURES and REWARDS system - - you get slow, gradual change. I submit that is whet we have been dealing with since the 90’s. A key change now is that the 2016 Future Value Chain reports and New Ways project has surfaced a healthy dissatisfaction with that pace of change. If you don’t have the right RESOURCES it creates frustration If you don’t have a solid ACTION PLAN you get false starts.
- Transform incentives and rewards current industry metrics and incentives emphasize short-term gain achieving true shopper satisfaction requires that trading partners align goals and emphasize long-term impact focus should be on consistently providing the right product at the right place and right time Build knowledge, skill and capability sets putting shoppers at the center requires putting our own people at the center of the solution equipping them with the right tools Design organisational structure around consumer needs and drivers introduce and encourage collaboration earlier in the planning process recognize the greatest growth comes when the consumer succeeds
- Adopt more sustainable business practices address volatile energy costs achieve better environmental performance
- Focus on the Consumer will not work if goals and measures are not shared via True Scorecards, or if supporting rewards and structures are not in place Connect our Business will not work if the connection point is not the shopper or if there are no mutual goals or the supply chain is still viewed as “yours versus mine” Prepare our People will be insufficient if there is not a clear, shopper focused business plan focusing the organization, or if there are not the common goals, common measures and information visibility to act on. Share our Supply Chain will not be possible without understanding how every decision impacts the shopper, or if the way we measure success is different. Too often we optimize components of the supply chain, but sub-optimize the whole