Ecr presentation ss chain - jeffrey - final

Changing the Game with Your Customers – A Supply Chain Strategy in Action ECR Asia Pacific Conference 2008, Thailand Jeffrey Russell, Accenture / Metta Siramongkholkarn, L’Oreal

In order to drive Consumer Products companies performance to the next level, many are adopting a ‘Game Changing Supply Chain’ strategy Copyright © 2008 Accenture All Rights Reserved. - Every Day Great Execution - Getting the basics right in terms of people process, systems, organisation and data. Cost optimisation through rationalisation of the cost base - Performance Optimization - Focus on service levels by raising the performance bar, fine-tuning the overall model and collaboration with the extended supply chain. - Game Changing Supply Chain - Supply chain differentiation based on customer / consumer behaviour and value to drive top-line growth Supply Chain Performance Journey Value

Effective supply chain strategies form the basis of competitive advantage and increase shareholder value ,[object Object],[object Object],[object Object],[object Object],[object Object],Copyright © 2008 Accenture All Rights Reserved.

Historically, FMCG companies have developed a ‘one size fits all’ supply chain that is designed to achieve cost efficiency Copyright © 2008 Accenture All Rights Reserved. Market Segmentation Supply Chain 1.0 Supply Replenishment Strategies Supply Sourcing Options Network Optimisation Product Segmentation & Portfolio Management Fulfilment Operations Customer Segmentation Demand Profiling & Forecasting Strategy Supply Chain Strategy Supply Alignment Demand Generation Foundation Cost to serve Sales & Operations Planning Performance Metrics Leadership Behaviours Culture ,[object Object],[object Object],[object Object],[object Object],[object Object],PLM Risk Management -- Accenture’s SC Customer Alignment Framework --

Accenture’s Customer Alignment Framework provides the structure and rigor to design ‘fit for purpose’ supply chains for differentiated customer/product segments Copyright © 2008 Accenture All Rights Reserved. Supply Chain 2.0 Supply Chain 1.0 Supply Chain 3 Product Segmentation + Portfolio Management Market Segmentation Customer Segmentation Demand Profiling & Forecasting Supply Replenishment Strategies Supply Sourcing Options Network Optimisation Fulfilment Operations Supply Chain 2 Product Segmentation + Portfolio Management Market Segmentation Customer Segmentation Demand Profiling & Forecasting Supply Replenishment Strategies Supply Sourcing Options Network Optimisation Fulfilment Operations Strategy Foundation Supply Chain Strategy Supply Alignment Demand Generation Business Strategy Supply Chain 1 Market Segmentation Product Segmentation & Portfolio Management Customer Segmentation Demand Profiling & Forecasting Supply Replenishment Strategies Supply Sourcing Options Network Optimisation Fulfilment Operations Cost to serve Sales & Operations Planning Performance Metrics Leadership Behaviours Culture ,[object Object],[object Object],[object Object],[object Object],[object Object],PLM Risk Management

Example Supply Chain Re-design “fit for purpose” Copyright © 2008 Accenture All Rights Reserved. SC Manager Customer Care Sourcing / Procurement Physical distribution Segment 1 Segment 2 Segment 3 Segment 1 Segment 2 Segment 3 Segment 1 Segment 2 Segment 3 SC Manager Segment 1 SC Manager Segment 2 SC Manager Segment 3 Customer Care Sourcing / Procurement Physical distribution Customer Care Sourcing / Procurement Physical distribution Customer Care Sourcing / Procurement Physical distribution Challenges : - multi-skills Supply Chain Managers - Limit increase of headcounts 6 – 12 Months

Different supply chain models are more appropriate depending on the demand predictability and the nature of the customer relationship Copyright © 2008 Accenture All Rights Reserved. Tight Loose Customer Relationship High Low Demand Predictability Segment 1 Segment 2 Segment 3 Segment 4 Lean Agile Transactional ‘ Base Model’ Flexible Collaborative Agile Joint Planning

Potential service offerings for strategic customer group Copyright © 2008 Accenture All Rights Reserved. ,[object Object],[object Object],[object Object],[object Object],Trade terms Efficient Assortment / Ranging Growth Incentives Product Discount - case deals Checkout Display Promotional Display Fulfilment Weekend deliveries Advance shipment notification Backhaul Ex factory gate / NDC Cross docking Direct store delivery Drop trailer Operational Integration Category Management Cash Management Standard (prompt) payment Accelerated payment Electronic payment Order to Cash Web ordering Field sales call Phone / fax EDI Weekend ordering Short lead time EDI invoice EFT e-POD CRM Nominated logistics contact

Differentiation between the stable and variable components of demand is a key step to determine fulfillment setup – managing volumes differently balances service levels and cost to serve Copyright © 2008 Accenture All Rights Reserved. ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],- Demand Types - - Fulfilment setup - ,[object Object],[object Object],[object Object],[object Object],Stable = 59% = 41% Stable (60%) Variable (40%) Customer C1 Indicative stable / variable split Customer C1 Indicative SC alignment

So in summary, consumer goods companies need to change the game while continuing to deliver everyday execution Copyright © 2008 Accenture All Rights Reserved. - Every Day Great Execution - Getting the basics right in terms of people process, systems, organisation and data. Cost optimisation through rationalisation of the cost base - Performance Optimization - Focus on service levels by raising the performance bar, fine-tuning the overall model and collaboration with the extended supply chain. - Game Changing Supply Chain - Supply chain differentiation based on customer / consumer behaviour and value to drive top-line growth Supply Chain Performance Journey Value

Ecr presentation ss chain - jeffrey - final

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