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The Consumer Goods Forum T h e G l o b a l N e t w o r k S e r v i n g S h o p p e r & C o n s u m e r N e e d s supply chain conference EXECUTIVEsuMMary2009 The Keys To success in a VolaTile MarKeT: Speed, Agility, Collaboration and Innovation www.tcgfsupplychain.com 2 Supply Chain Conference Report 2009 What is The consumer Goods forum? T he Consumer Goods Forum is an independent global parity- based Consumer Goods network. It brings together the CEOs and senior management of around 400 retailer and manufacturer members of all sizes, across 150 countries. Its members have combined sales of EUR 2.1 trillion (USD 2.9 trillion). The Forum was created in June 2009 by the merger of CIES - The Food Business Forum, the Global Commerce Initiative (GCI) and the Global CEO Forum. The Consumer Goods Forum is governed by its Board of Directors, which includes an equal number of manufacturer and retailer CEOs and chairmen. It provides a real global platform for thought leadership, debate and networking between retailers, manufacturers and their partners. Its strength lies in the privileged access it offers to the key players in the sector and the development and sharing of best practice at the highest level. It has a mandate from its members to develop common positions on key strategic and practical issues affecting the consumer goods business and to focus on non- competitive collaborative process improvement. With its headquarters in Paris and its regional offices in Washington, D.C., Singapore, Tokyo and Shanghai, The Consumer Goods Forum serves its members throughout the world. For more information visit www.theconsumergoodsforum.com What is the supply chain conference? The objective of the conference is to bring together members of the Consumer Goods Forum for educational exchange of top-of- mind issues in Supply Chain in the retail sector. Supply Chain aims to provide opportunities for Supply Chain senior executives and Logistics Directors to network and debate the issues. At the event, practical case studies based on real experiences are presented by the speakers representing retailers and manufacturers. For more information visit: www.tcgfsupplychain.com 14th - 16th October 2009 / Istanbul, Turkey 3 The consumer Goods forum supply chain committee T he thematics of the Supply Chain Conference are defined by a committee of experts who meet on an ongoing basis to ensure Members of The Consumer Goods Forum have the latest ideas and Committee creates this event as a platform for discussion on top- of-mind issues and to bring knowledge and networking to retailer and manufacturer executives from around the globe. developments in Supply Chain at the Conference. The Supply Chain Chairman: Ian MuMby, Head of Food Supply Chain & Logistics, MARKS & SPENCER, United Kingdom PETRA ALBUSCHUS TaKaO IWaMOTO Senior Vice President Logistics, President, ICA SVERIGE AB, Sweden AEON GLOBAL SCM CO. LTD, Japan MaRK ayLWIn SHaROn JESKE Managing Director Director, - Booker Delivered Wholesale, Operational Management Programmes, BOOKER DIRECT, United Kingdom THE CONSUMER GOODS FORUM LEANDRE BOULEZ LUC KOENOT Director of Synergies - Purchasing Senior Vice President & CIO, and Quality, AUCHAN GROUP, France DELHAIZE GROUP, Belgium KEVIn DOuGHERTy REnE MEyER Group Vice President, Head of Logistics, Chief Supply Chain Officer, MIGROS, Switzerland THE KROGER CO., USA DANIELE FREGNAN CHRISTOPH OVERLACK Vice President Logistics, Head of Supply Chain Management -Europe, GRUPPO PAM, Italy NESTLE SA, Switzerland naM PaTEL CLauS GaRbISCH CEEMEa Customer Service Senior Vice President Global Business Logistics Director, Development, DHL SOLUTIONS, Germany PROCTER & GAMBLE, Switzerland JACKY GERVIS JOHN PHILLIPS Co-CEO, Vice President, Customer Supply Chain FM LOGISTIC, France & Logistics, PEPSICO, USA MaRTIn GLEISS TOny VEnDRIG Supply Chain & Logistics Manager, Executive Vice President Supply Chain, SPAR AT, Austria ALBERT HEIJN, The Netherlands 4 Supply Chain Conference Report 2009 Thursday 15 October th Welcome to the supply chain conference 2009 Ian MuMby, Head of Food Supply Chain & Logistics, Marks & Spencer, United Kingdom and Chairman of The Consumer Goods Forum Supply Chain Committee W elcoming delegates from 29 countries, Ian Mumby said the Supply Chain Conference format had stood the test of time, providing pragmatic case studies, real experience and concrete takeaways. He said the keys to success in turbulent times were speed, agility, innovation and collaboration. Welcome to The consumer Goods forum aLan McCLay, Managing Director, The Consumer Goods Forum T he Consumer Goods Forum was formed in June 2009 by the joining of CIES – The Food Business Forum with the Global Commerce Initiative (GCI) and the Global CEO Forum, two global retailer and manufacturer collaborative platforms, bringing a wealth of industry initiatives, tools and thought-leadership platforms together in one entity. Typically in a given year, over 2,400 executives from 650 companies in 70+ countries are engaged in one or more of the 29 activities of CIES and GCI combined. The governance has been designed on a strict parity basis, with 24 retail CEO board members and 24 manufacturer board members. The Vision The fiVe sTraTeGic prioriTies ►Solutions for Consumers ►Knowledge sharing and people development more and more knowledgeable and demanding ►Health & wellness including food (& product) ►Solutions for the Industry safety and security knowledge, best practices, efficiency, reputation ►Sustainability ►Solutions for our World ►Operational excellence global performance, sustainability, progress ►Emerging trends 14th - 16th October 2009 / Istanbul, Turkey 5 A Look into the Future a look into the future – are you ready for the upswing? HanS Van GRIEKEn, Vice President Business Innovation, CapGemini, The Netherlands I n a telling illustration of how attitudes have evolved toward communication channels, in a making use of shared warehousing and city distribution hubs. The collaborative approach offers many benefits. One, proposed by Van Grieken, is that an RFID-enabled pallet, lost in the market, could recent event, some girls trapped contact passing lorries, even those of competitors, ensuring that the in a storm drain called for help via goods inside get to their destination before their validity date expires. Facebook, rather than calling the It’s an example of reacting to things you didn’t plan for: Van Grieken emergency services. Projections of sees this as the key to unlocking the 2016 value chain. future technology from past decades often look dated now, but back in the ‘60s, futurologists correctly foresaw that consumers would manage browsing, shopping and payment remotely via computers. Where they four pillars of The fuTure went wrong was in assuming each function would need a separate supply chain: terminal. What these visionaries could not imagine 40 years ago was the smart phone. It took until 2002 before Microsoft felt able to predict that ►Information sharing in-store shopping and payment could be achieved via mobile phones and a further seven years before Albert Heijn could go live with its ►Collaborative warehousing revolutionary Touch & Go payment system. The key to being ready for the future involves understanding Generation Z: for these 18-25 ►Collaborative city distribution, including home year olds, personal network and personal technology is everything. delivery and pick-up There is increasing appetite for technology among consumers and a corresponding need for more delivery models. ►Collaborative non-urban distribution, The 2016 Supply Chain is a consumer driven model, that envisions including home delivery and pick-up direct delivery of products to consumers, who order from multiple touchpoints. It sees collaboration as vital, with multiple retailers future supply chain 2016 / Global upstream supply chain initiative ROLAND DACHS, Co-Chair 2016 Future Supply Chain Platform, Co-Chair, Global Upstream Supply Chain Initiative (GUSI), France Picking up the baton, Roland Dachs said the industry needed to move from a “sell mentality” to a “share collaborative physical logistics as the future model, in which different combinations of transport and locations can be optimised. Producers share resources in supplying to manufacturers, who mentality”. Collaboration will play then share resources in supplying retailers. Retailers collaborate a critical role as we go forward. It is to supply stores in the “final mile”. The result is less cost and the only way to respond to increasing fewer CO2 emissions. The Future Supply Chain Platform exists to pressures: the need for sustainability, drive change via collaborative pilot projects, drive deployment of increased urbanisation and regulatory standards in the transport sector and create KPIs for the future restrictions, shifting demographics supply chain. and the rising cost of materials and energy. Dachs put forward 6 Supply Chain Conference Report 2009 Innovation and Breakthrough Ideas in Supply Chain from around the World The challenge for freshness MaSaRu nOHaRa, Executive Officer, Senior General Manager, Sales Headquarter for Nationwide Retail Chain, Asahi Brewery, Japan b eer accounts for 87% of Asahi’s business and its leading brand is Asahi Super Dry, which is also Japan’s leading brand. product was not on the shelf for longer than a month after shipment. To achieve this, the Launched in 1987, company had to adopt the policy of it took 50% of not producing or moving anything the total Japanese that was not strictly necessary. beer market in 2008. Accurate demand forecasting It is distributed to 80 countries, was therefore critical. Next, the with local production in China, production system needed to be Thailand, Canada, Czech Republic, UK and flexible and operate according to Russia, following Asahi’s policy: “the fresher demand. The time from production the better”. to shipment was reduced from 10 days to 3.8 days. The rate of direct Super Dry was created to fill a consumer shipment from factory needed to demand for a crisp, clear, fresh-tasting be increased, from 63% to 90% or more. Lead times needed to beer. Asahi noticed that the beer tasted come down, along with the number of days of supply on inventory best in the factory, when it was freshest. The in stores. company then set itself the challenge of ensuring this unoxidised taste reached Lastly, the company communicated Super Dry’s freshness consumers. Key to this was reducing via adverts, to sell the message that fresher beer was better shipment times from 10 days to five quality beer. days. The next step was to ensure that paradigm shift in construction logistics PauL ROLLETT, Director, MCI, United Kingdom M oving a technology from one sector to another can be problematic, as barriers to change can be put up by the incumbents with an interest in obvious when a 17-story hotel can be erected in 3 days. What goes up quickly can also come down quickly, or be moved to more profitable locations. maintaining the status quo. This said, Paul Rollett The cost savings allow hotel operators to gain a succeeded in gaining headway in the construction price advantage. Rollett claims a recent major industry, even though his company employs housing project in Abu Dhabi met all sustainability technology used to build shipping containers. requirements. Since the modular system lends itself The premise is based on modular, prefabricated well to the construction of buildings that need to be construction and is ideal for hotels – such as those duplicated, Rollett sees great potential in retail and built for client Travelodge – or apartment complexes, which particularly in projects that combine accommodation over retail. demand duplication of a standard unit. The benefits become 14th - 16th October 2009 / Istanbul, Turkey 7 learning from Transport challenges in the Developing World PROfESSOR aLan WaLLER ObE, Trustee of Transaid and Chairman of ELUPEG (European Logistics Users Providers and Enablers Group), United Kingdom H alf the population in developing countries live more than 8 kilometres from the money would fund a only single four-wheel-drive vehicle. Transaid also partnered with ITCT in Zambia to provide driver training to reduce road-related deaths. nearest health centre and have a five-hour commute to work. Transaid is an independent charity that aims to reduced poverty Key lessons and improve livelihoods in 20 countries in Africa and across the developing world. Its goal ►Determine solutions to meet end user is to improve access to basic requirement and find user-driven solutions services through the development of appropriate transport ►Find practical solutions that are management systems. Transaid works with key companies in the appropriate and sustainable in that UK and European logistics industry to transfer knowledge, skills environment and best practice to developing countries. In most cases, it is not access to vehicles that is needed, but the skills to manage transport ►Technology is an enabler not a driver: the effectively and sustainably. Simple, pragmatic solutions are the key is to invest in people most easily replicated and Transaid’s solutions are adapted to the local environment and the move to self-sufficiency is critical. For ►Collaboration and partnership will lead to example, in Zambia, the provision of 40 bicycle ambulances and the success training of mechanics – in collaboration with other organisations – reduced time to healthcare by 80%, saving lives in 86% of cases. The same 8 Supply Chain Conference Report 2009 Managing the supply chain of products that “Do not sell” XaVIER Hua, Group Supply Chain Director, France Telecom – Orange, France LauREnT CHEVREuX, Vice President and Partner, A.T. Kearney, France H ow do you manage the supply of products that do not sell? This was the challenge for Orange, which centralising replenishment decisions within the supply chain function, to drive efficiency. While this idea – as deals in a range of SKUs, of which it generally does in decentralised the majority (57%) sell less than retailers – generated considerable 1 unit per week on average. Some resistance from the sales function and 40% sell less than six units. Only 2% regional heads at the loss of regional sell more than entrepreneurial six units per autonomy, a Xavier Hua Laurent CHEVREuX week. While pilot delivered he did not have a measure for it, Hua was undisputable benefits: stock-outs were convinced that some stores over-ordered reduced by 80% and sales uplift, with no to protect them from stock-outs, forcing increase in inventory cost. In fact a reduction them to devote shelf space to obsolete in cost was achieved as managers no longer product so it could sell through, while other needed to perform emergency replenishment. stores were plagued with under-availability Buy-in was thus secured and the project of current products. With AT Kearney, he rolled out, bringing uplifts from 4% in the UK developed the “counter-intuitive” idea of to 26% in Jordan. lessons in logistics learned from the Military: sense & respond PROfESSOR DR. WaLTHER PLOOS Van aMSTEL, Professor in Defense Logistics, Netherlands Defense Academy and Consultant, TNO Mobility & Logistics, The Netherlands “ You may think you have competition,” says Professor van Amstel. “But ours is actually trying to kill us.” The logistics of supplying a military deployment in Afghanistan, for example, logistics is about improving decisions, so helping ground forces to provide accurate and transparent source information is critical. “The best person to take a decision is the one doing the work,” van with 150 litres of fuel per soldier per day and one million litres Amstel asserts. The final piece is effective scenario planning. In of water every six months in hostile conditions is not without the military, a well-managed supply network is a Unique Selling its challenges. Today’s enemy has Point (USP): it makes the difference between success and failure. different perspectives on dying and attacking, making tactics unpredictable. It is therefore inappropriate to continue using Key lessons the statistical methods of demand forecast developed under Cold War conditions. A much more flexible “sense and respond” system is ►Tactical level: predict and prepare needed. Key to this is a complex network of collaborators, such as ►Operational level: sense and respond companies Shell and Halliburton. But equally important is developing ►Develop the skills of logistics personnel situational awareness. Improving 14th - 16th October 2009 / Istanbul, Turkey 9 The Magic of Dabbawala unfolded ManISH TRIPaTHI, Chairman, Dabbawala Foundation, India T he key to the stunning efficiency and negligent error rate (one in six million) of Mumbai’s unique dabbawala service, according to Tripathi, is the Tripathi advises. If the women are late, the dabbawala won’t wait for them. If they are consistently late, they will be ejected from deeply-instilled belief of the largely illiterate force of the service. The collecting dabbawala takes deliverymen that, by carrying home-cooked lunches to his haul of dabbas to a local sorting office, Mumbai’s businessmen, they are serving God. Tripathi where they are grouped according to delivery believes that being accountable to a divine authority is area and packed onto trains. At each station, both more important and ultimately more effective than the relevant batch is handed over to a local an MBA, for which qualification he holds little respect. dabbawala, who will make the delivery, often on foot or by bicycle. Every dabbawala is paid The service is driven by demand from Mumbai’s office the same salary, regardless of his function, workers, who prefer a home-cooked meal as both which Tripathi believes fosters cohesive cheaper and safer than eating out at lunchtime. Its teamwork. The whole service – which delivery chain is ruthlessly efficient. Meals are cooked sees 5,000 dabbawalas transport 200,000 at home during the morning “by wives or sisters” and lunchboxes every day, is carried out, rain or packed into a tin (or dabba). Each dabba is marked with a colour shine, using virtually no modern technology. Finally, Tripathi says code, which indicates, without language, the delivery address the service does not advertise and does not need to, as it serves a and rail station, along with the return address. The tins are then genuine consumer need. collected punctually by a local dabbawala. The system has no time or sympathy for late preparation: “get rid of bad customers,” 10 Supply Chain Conference Report 2009 supply chain conference 2009 14th & 16th October - Istanbul, Turkey 14th - 16th October 2009 / Istanbul, Turkey 11 12 Supply Chain Conference Report 2009 Friday 16 October th Improving the Business. Today. contrast, complexity and challenges of Turkish retail MEHMET nanE, General Manager, Teknosa and Chairman, AMPD – Trade Council of Shopping Centers & Retailers, Turkey T urkey is home to the world’s first shopping centre: the Grand Bazaar was built in what is now Istanbul in 1461. It houses nearly 4,000 independent retailers, covering 45,000 square metres increasing urbanisation: as of 2008, 75% of the population live in urban centres. The country and employs 25,000 people. The format is representative of a boasts 19 cities with more than country in which the majority of retailers (around 60%) are “mom one million inhabitants. and pop” stores, with organised retail making up the difference. Organised retail is also a net However, following the liberalisation of the economy in the 1980s, employment generator, with organised retail is closing the gap, developing hand in hand with the sector reaching 408,000 Turkey’s economy. There has been foreign direct investment (FDI), employees over 17,5 million square since the 1980s; indeed the country boasts one of the largest metres of sales area in 2008. This sources of FDI in Central and Easteren Europe. But equally brings development of the formal important is the fact that traditional Turkish retail is evolving economy, with employees reaping itself. Key to the modernisation process was the move to a single- benefits, in a country where 43.5% party government in 2002, speeding up the decision-making of the workforce is still operating process in terms of trade liberalisation. It is also being driven by outside the social security system. The rise of organised retail, consumer demand, as per-capita GDP rises*. Nane argues, also brings competitiveness in consumer service and “At the end of the day, we are working for product quality, which has triggered awareness among consumers our customers,” Nane explains. “And and contributed to demand. this is the wish of our customers.” Turkey’s population is predominantly Following its own financial crisis in 2000, Turkey’s banking sector young (average age 28.5), and the was reformed and as a result the country is not carrying toxic young are driving the change, assets. In readiness for an eventual entry in the EU, Turkey has with 60% of shopping adopted the European trade and customs system and has a free- centre visitors under 30. trade agreement with Mediterranean countries. Despite the Another driver evolution of the retail sector, Nane argues that Turkey is still of change is under-retailed and represents a prime opportunity for foreign Tu r k e y ’ s direct investment. *(Nonetheless, the rate of GDP growth has been slowing in recent years, from +8.4% in 2005 to +1.1% in 2008, according to TurkStat) 14th - 16th October 2009 / Istanbul, Turkey 13 sustainability: human, Talent and environmental JOHn S. PHILLIPS, Vice President, Customer Supply Chain & Logistics, PepsiCo, USA P epsiCo’s current mission to “do better by doing better” – or achieve business benefits by using sustainable practices – has its roots in 1999, “before it became in vogue”, according to Phillips. As they progressed, the PepsiCo executives realised that there were economic and financial advantages to be gained from adopting sustainable practices and so charged full ahead in developing ostensibly sustainable technologies which could yield a competitive advantage. One such is the trailblazing innovation of a fully compostable potato chip packet. However, PepsiCo’s philanthropy does not extend to the chip packets of its competitors: “This was the toughest nut to crack in terms of technology, so we will want to have a first mover advantage with it,” Phillips explains. Other schemes include the donation of biomass generated by its Cedar Rapids Oat Mill to the nearby University of Iowa, which uses the organic byproduct to power its campus. Waterless bottle rinsing has allowed the firm to save 600 million gallons of water by 2010. Elsewhere, car parks are covered with photovoltaic panels. PepsiCo’s Illinois head office was installed with wind turbines, generating some local controversy from architectural purists and garnering some publicity for PepsiCo in the process. Overall, the company has achieved a water reduction of 20%, an energy (electricity) reduction of 20% and a fuel reduction of 25%. 14 Supply Chain Conference Report 2009 Green supply chain Management at Kao corporation MInORu uTSuMI, Vice President, Logistics, Kao Corporation, Japan K ao operates an uncommon distribution system for Japan, in that its bypasses the wholesale trade and sells direct to 90,000 retail outlets. Deliveries leave the company’s eight manufacturing facilities by lorry, train and sea bound for 21 logistics centres. From there, orders go out by small truck, either directly to stores or to retailers’ DCs. More than 20% of its logistics are carried out by rail and the company was the first to gain the Eco Rail Mark, in 2005. F or this system to work, it is critical to base production on actual consumer demand. Here, cooperation between parties is mission- critical. Demand information from retail is shared upstream, where it drives procurement for Kao. Coordination of the supply effort all the way down the chain is also vital. Reducing the operation’s environmental load involves efforts in a number of fields. Product sizes and packaging designs have been optimised to reduce load and increase loading efficiency. In detergents, for example, compacting and concentration (from 1kg down to 400g) means less rinsing is needed at the consumer end, saving water. Fuel-efficient vehicles have been introduced, while deliveries are scheduled for maximum efficiency and visibility. Demand forecasting, combined with Kao’s global inventory monitoring system, which generates excess or shortage alarms, achieves a 0.01 stock-out rate. The benefits are improved customer satisfaction and increased working capital. The last piece in the chain is delivery planning: by working out routes and collaborating on delivery times, routes can be optimised to minimise mileage. Simply deciding that trucks will only go forward (and not back on themselves) could reduce mileage by 20%. Since the supply chain management programme began, Kao has achieved inventory reduction, with days of stock down 31%; out of stocks have been reduced by 75% and logistics cost as a share of unit price is down by 31%. 14th - 16th October 2009 / Istanbul, Turkey 15 efficiency through shared and Multi-user Warehousing WyaTT bELL, Vice President, Global Business Development, FMCG Corporate Logistics, Kuehne + Nagel Management, Switzerland CLauS GaRbISCH, Senior Vice President Global Business Development, DHL Solutions, Germany JaCKy GERVIS, Co-CEO, FM Logistic, France JOE LEbRaTO, Senior Vice President Africa, Agility, United Arab Emirates uMuR ÖzKaL, CEO, EKOL, Turkey Moderated by LéanDRE bOuLEz, Director of Synergies – Purchasing and Quality, Auchan Group, France & Supply Chain Committee Member from left to right: Jacky Gervis, Wyatt bell, Claus Garbisch, Léandre boulez, Joe Lebrato and umur Özkal I n a panel discussion, Joe Lebrato said the chief benefits of multi-user warehousing included a lower capital investment than a dedicated warehouse, since office, security, energy and From the floor, Alan Waller asked what it would take to “get this no-brainer moving forward”. Léandre Boulez pointed out that, while the idea had been around since 1975, because of water costs were shared, along with taxes. In addition, users competitive issues, the larger retailers tended to keep their single- paid only for the space they used. This brought lower cost and user warehouses. Garbisch agreed there had been “competitive higher sustainability, he said. Wyatt Bell said shared warehousing moaning because people don’t want to share”. Gervis added: “We allowed a single delivery of a full load, rather than multiple have really pushed our customers but they simply don’t want to deliveries of part load. Claus Garbisch added that like customers change delivery times and are paranoid about competition.” Bell were grouped together; for example, chilled produce was kept said that the idea was often supported “at the strategic level” but in one temperature-controlled facility, while ambient product failed to get buy-in locally. Tony Vendrig, Executive Vice President was kept in another location: the idea was to gain synergies by Supply Chain, Albert Heijn asked if the pricing was transparent sharing. He conceded that there was a point where the potential enough. Gervis said that an important USP was flexible pricing, benefits could be “eaten by complexity”. depending on stocks. Garbisch said service providers had to show customers the cost, but customers had to accept that the service There were other negative aspects. Umur Özkal said that different providers needed to make a margin. types of goods needed different handling, devices and floor space, leading to “client-based silos” within facilities. In addition, some So, although shared warehousing is consistently put forward as warehouse customers don’t want to share with rivals: if one client the future of logistics, it appears that retailers have multiple dominates they could “push out rivals and claim the benefits for objections: around competition, around division of benefits and themselves”. Jacky Gervis agreed trust was an issue. around pricing. These issues will have to be addressed if multi- user warehousing is to become a real, working part of the much- vaunted 2016 Supply Chain and not just a theoretical solution. 16 Supply Chain Conference Report 2009 continuous improvement in the Grocery retail Market – The experience of portugese retailer sonae JaIME MaIa, Human Resources Manager, Sonae, Portugal nunO aLMEIDa, District Store Operations Manager, Sonae, Portugal S onae, Portugal’s biggest retailer has two keywords: “kaizen” and “muda”. In Japanese, standardised and deployed. Job tasks, such as transport and merchandising, were Kai and Zen, mean change for the also standardised, with visual better: everything else is “muda” instruction guides available where or waste. Waste of time, stock, the task is performed. Warehouses information, effort, manpower saw their ergonomic revisited and equipment. How much time and reorganised, with a fast lane and manpower is lost searching for promotional categories. This for basic tools, stock items, brought a productivity gain of last year’s sales figures? Sonae 35%. decided to quantify and eliminate In order to empower and its “muda” using the Five S motivate staff, Sonae canvassed programme: sort out, straighten, nuno aLMEIDa Jaime MaIa its workforce for innovative scrub, standardise and sustain. It ideas: 20,000 were generated, leading to 200 new projects. is not sophisticated, but it is critical to efficiency: a place for Sonae believes it was successful because the concept was simple, everything and everything in its place, creating a framework for because it allowed everything to be put into question, because it back office tasks. The initiative freed staff from non-value-adding used real working teams that learned to solve complex problems tasks. with simple tools. This bottom-up approach created champions Visual management was key to achieving this: simple, high- and had a positive effect on staff morale. Intra-store competition impact tools such as colour coding to sort pallet stacks and limit created a climate of contagion in which this “quiet revolution” their height, or to label items or create workplans were agreed, spread from store to store, free from top-down diktats. 14th - 16th October 2009 / Istanbul, Turkey 17 actively Managing and implementing the supply chain Vision at carrefour JEan-fRançOIS CaILLauD, Global Head of Supply Chain, Groupe Carrefour, France PIERRE MERCIER, Partner and Managing Director, The Boston Consulting Group, United Kingdom C arrefour’s supply the question of “logistics” to chain vision is about moving from ►Supplier integration and the development of consolidation centres an “integrated customer driven ►Synchronisation of internal chain”. In the old model, each and external data stage of the chain – from supplier to supplier DC, to Carrefour DC, ►Order effectiveness: to shelf – was operated as a silo true demand-driven ordering and optimised separately. In the ►Increase cross docking activity future system, the focus is on end-to-end optimisation, driven However, this proved to be a by shopper needs, with emphasis moving target, as there were on the total cost of delivered changes to ranging policy – from goods. In this flow, the Carrefour more choice, then fewer SKUs Pierre MERCIER and now local customisation of Jean-françois CaILLauD DC is eliminated and deliveries are cross docked rather than brought into a DC’s inventory. However, range; there were changes to the banners and a push towards it is vital to include enough flexibility for the system to adapt to lower-cost sourcing. There was pressure to increase stock turn changing needs. Back in 2004, Carrefour launched a number of to mitigate shorter supplier payment terms and, lastly, there was initiatives aimed at transforming the supply chain, among them: pressure on carbon emissions. The key was to “turn the supply chain challenges into opportunities”. The single brand, multi-banner strategy provided a chance to reduce three supply chains to one, gaining economies of scale Key lessons and shared best practice. The move to local ranging provided an opportunity to “industrialise” the central replenishment facility. The new critical mass enabled some consolidation at the sourcing ►Define vision as a set of principles, not a level in Asia , reducing lead times and cost and improving static view availability. Carrefour still has some way to go: cross docking, for example, is still only at 50% of target. ►Industrialise processes and methods ► Ensure flexibility to remain adaptive ►People matter: bring them with you 18 Supply Chain Conference Report 2009 supply chain excellence – The Key to improving the Business at Kroger JEff bORnInO, Senior Manager, Supply Chain Initiatives, The Kroger Company, USA “E verything starts with the shopper,” Jeff Bornino claimed. The supply chain enables a customer focus, bringing freshness and product quality. “Initiatives should have clear and tangible density and reductions in case damage. Stores were able to eliminate inbound audits and benefits for the customer. If not, move on to something else.” achieve a reduction in the number of received order pallets. Returns Eight years ago, Kroger created a new design for grocery caused by picking errors were also distribution. Today, the company is building store-ready mixed eliminated. The retail-ready pallets pallets in an automated environment. The inbound receiving drove efficiency in-store. Finally, process was automated, providing 100% article identification and fewer stock-outs and quicker 100% weight control. replenishment delivered higher Case picking is fully automated and more than 10,000 different customer satisfaction. However, change can be uncomfortable. articles are picked automatically. This translates as error-free Effective change means understanding the return on investment order picking and greater flexibility when it comes to SKU and knowing the resource commitment and timing before you assortment. Shipping costs were reduced by improved pallet begin. The consumer Goods forum would like to thank Migros Türk for hosting the store visits on 14th october. The consumer Goods forum would like to thank the following companies for their valued contribution to this event: 14th - 16th October 2009 / Istanbul, Turkey 19 The consumer Good forum calendar of events 3rd – 5th february The Global food safety conference Washington, D.C., uSa Connecting the Pieces: A Global Food Safety Framework for the 21st Century Catherine FRANCOIS Tel: (+33) 1 44 69 99 21 ►An event for Food Safety experts and stakeholders in the food industry. email@example.com www.tcgffoodsafety.com 18th – 19th March foro latino São Paulo, brazil Jonathan BERGER Tel: (+1) 301 563 3383 ►An event for top-level executives for regional grocery retailers from Latin America. Meetings firstname.lastname@example.org are conducted in Spanish. Participation is by invitation only. 15th – 17th april round Table of the americas Los angeles Jonathan BERGER Tel: (+1) 301 563 3383 ►A 2-3 day event for top-level executives for regional grocery retailers from the US, Canada email@example.com and Latin America. Participation is by invitation only. 20th april 2010 Japan Day Tokyo, Japan Marc VAN DER LIET Tel: (+33) 1 44 69 99 30 ►A member-exclusive event for consumer goods and retail executives in Japan. This annual firstname.lastname@example.org event provides The Forum’s local membership with an international perspective and high-level Mitsuru TAKEYAMA networking and knowledge exchange opportunities. Tel: (+81) 3 6268 94 77 21st -23rd april The iT conference Vienna, austria More for less: optimizing operational excellence in challenging Times Sharon JESKE ►An event for IT executives in retail seeking ways to improve customer satisfaction and Tel: (+33) 1 44 69 99 36 business through IT. email@example.com www.tcgfit.com april Global food safety initiative - regional event China (location and date to be defined) Catherine FRANCOIS Tel: (+33) 1 44 69 99 21 ►A local event for Food Safety experts and stakeholders. firstname.lastname@example.org www.tcgffoodsafety.com 23rd -25th June The Global summit London, united Kingdom Re-shaping the World: Winning in a Consumer-led Future Rhoda LANE-O’KELLY ►An event for top-level executives in the consumer goods business that provides insights into Tel: (+33) 1 44 69 84 88 the key challenges facing our sector and an unparalleled opportunity for networking among email@example.com CEOs. www.tcgfsummit.com / from China www.tcgfsummit.cn 10th – 12th October The future leaders congress berlin, Germany Rhoda LANE-O’KELLY ►An event for future leaders to analyse the competitive dynamics in the sector and to Tel: (+33) 1 44 69 84 88 enable them to further develop their potential and enhance their contribution to the firstname.lastname@example.org business. www.tcgfflp.com / from China www.tdfflp.cn 12th – 14th October The supply chain conference berlin, Germany Sharon JESKE Tel: (+33) 1 44 69 99 36 ►An event for Supply Chain and Logistics executives in the consumer goods business. email@example.com www.tcgfsupplychain.com October Global food safety initiative - regional event brazil (location and date to be defined) Catherine FRANCOIS Tel: (+33) 1 44 69 99 21 ►A local event for Food Safety experts and stakeholders. firstname.lastname@example.org www.tcgffoodsafety.com 2nd – 4th november The Marketing forum Lisbon, Portugal Sharon JESKE Tel: (+33) 1 44 69 99 36 ►An event for executives in Marketing, Sales & Business Development. email@example.com www.tcgfmarketingforum.com For more information on the Supply Chain Conference: www.tcgfsupplychain.com Do not miss the next Supply Chain Conference! 12th-14th october 2010 Berlin, Germany