1 draft presentation to new ecr co- chairs for meeting on 13 september 2006 for discussion at...

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Draft presentation to new ECR co-Draft presentation to new ECR co-chairs for meeting on 13 chairs for meeting on 13

September 2006September 2006

For discussion at Operating Board meeting on 5 September 2006

Supply Side Agenda 2006/2007

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Current priority areasCurrent priority areas– Optimal Shelf Availability– Shelf Ready Packaging– Shrinkage

Recommended future priority areasRecommended future priority areas– Deliver & implement current projects– Supporting role for Global Data Synchronisation– Transport – Returnable asset management


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Optimal Shelf AvailabilityOptimal Shelf Availability


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Optimal Shelf Availability – some backgroundOptimal Shelf Availability – some background

Implementation across Europe is still low


Average current implementation rate in Europe:

1.2 (out of 4)

planning/pilot phase

(source: full global scorecard benchmark)

Average current out-of-stock rate

in Europe

11%

(source: global scorecard KPI

section)

There are varying degrees of implementation across countries.UK, France and Italy leading the way

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Optimal Shelf Availability – some backgroundOptimal Shelf Availability – some background

How to boost implementation throughout ECR community?


Recommendations from ECR Europe OSA strategy meeting – 12 May

We need a target

We need an action plan

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Optimal Shelf Availability – targetOptimal Shelf Availability – target


Reduce Reduce OOS byOOS by

50%50%within next within next 3 years3 years

Halve the gaps!Halve the gaps!

Size of the prize: Size of the prize: 4.7 billion Euro*4.7 billion Euro*

* Total grocery sales Europe 2005 = € 965 bn (Planet Retail);

OOS rate 11% = € 105 bn ; sales loss: 9% = € 9.45 bn50% OOS reduction = € 4.7 bn potential sales increase

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ECR Europe OSA action plan – work at 3 levelsECR Europe OSA action plan – work at 3 levels

CompaniesMeasure

•Physical audit

•Automated tool

Analyse root causesUse root cause catalogue

ImproveImplement improvement levers

National ECRs

Report measurements

Participate in learning programmes

Aggregate measurement

Set up learning programmes

Share best practices

ECR Europe Board members

Evaluate measurement against target

Make OSA a priority in your company

Provide ressources•cross-functional teams•OSA champion

Reward OSA performanceAdapt KPIs

Report measurements

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Shelf Ready PackagingShelf Ready Packaging


Shelf ready packaging (SRP) is the term used to refer to a product that comes in a ready merchandised unit which is easy to identify, easy to open, can easily be put onto the shelf and disposed of, allowing an optimisation of shelf replenishment, visibility and shopping trip.

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Shelf Ready Packaging – Some backgroundShelf Ready Packaging – Some background

– Manufacturers and retailers are using SRP to improve:• In-store operations • Product presentation / shopping trip• Availability

– Problem: fragmentation of SRP requirements at local level, benefits are not equally distributed through the supply chain

– ECR Europe project started work in February 2006– Objective: be more efficient through harmonisation of SRP

requirements at a European level and agree on joint approach to cost/benefit analysis

– Plan to release a recommendation (blue book) by end of 2006


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Shelf Ready Packaging – Focus areasShelf Ready Packaging – Focus areas

– Guiding Principles

– Business case

– Functional requirements


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Shelf Ready Packaging – guiding principlesShelf Ready Packaging – guiding principles

• Always of value to the shopper, retailer and manufacturer

• Compliance with environmental legislation & public policy concerns

• Avoid fragmentation & complexity• Maintain brand identity• Measure implementation• Need for long-term commitment from retailers and

manufacturers• Compliance with total supply chain efficiency principles


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Shelf Ready Packaging – Business Case 8-Shelf Ready Packaging – Business Case 8-step approachstep approach


Adopt Value Chain Impact Approach

Perform High Level Assessment

Agree relevant Business Case Drivers

Perform Business Case Assessment

Implement Solution or Other Improvements

Track / Measure Implementation Success

Validate with Guiding Principles

In line with total supply chain efficiency principles

Define & evaluate alternative solutions

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Shelf Ready Packaging – Functional requirementsShelf Ready Packaging – Functional requirements

In-store execution recommendations

SRP solution assessment tool


Easy open

Easy identification

Easy shelf

Easy dispose

Easy shop

+

+

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Shelf Ready Packaging – Future work itemsShelf Ready Packaging – Future work items

– Pilot & validate the recommended approach (companies)

– Communicate blue book in the ECR community (ECR Europe & nationals)

– Implement recommended approach in the industry• Via national ECRs• Through companies sharing their experience

– Maintain SRP core team in 2007 to promote implementation


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ShrinkageShrinkage

(stock loss in the supply chain)


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– Project has been on-going since 2000

– Losses are high

– Main deliverable: shrinkage reduction roadmap, now widely known in the ECR community and beyond

– Project still attracting new retailers and manufacturers (e.g. Wilkinson, Adidas, Asda, Diageo)

– Has delivered highly-rated sessions at conferences and a series of excellent training seminars

– Has attracted CEO level interest (e.g. Tesco, Royal Ahold, Makro, ICA)

Sector Loss in % of Sales (2004)

Loss in Value (2004)

Retailer 1.84€ 18.5 bn

Manufacturer 0.57 € 5.7 bn

Total 2.41 € 24.2 bn


Shrinkage – some background

Corporate Policy

1. Plan

2.Map & Measure

3. Analyse

4.Develop Solutions

5. Implement

6. Evaluate

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Shrinkage – some backgroundShrinkage – some backgroundProject has delivered tangible benefits


Organisations Location Results

Tesco UK €143million annual savings

Tesco & Gillette Hungary - 74% losses + 288% sales

B&Q & Plasplugs UK - 50% losses + 33% sales

Feira Nova & Danone Portugal - 45% total shrink

Ahold & sausage suppliers Poland - 42% losses

Sainsbury’s spirits category UK - 40% losses + 10% sales

Sonae & Colgate Palmolive Portugal - 29% losses

Sainsbury’s & Menzies UK - 25% losses + 10% sales

Wickes & GET UK - 7% losses

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Shrinkage – current work itemsShrinkage – current work items– Offender research: understanding the opportunities

for internal theft – white paper by mid-November– Rapid Improvement Roadmap: short version of the

Shrinkage roadmap for rapid deployment in “hot stores” – white paper by end of October

– Sharing of experience between retailers and manufacturers at regular project team meetings


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Shrinkage –future work itemsShrinkage –future work items:

– ROI of shrinkage control technologies (e.g. data mining, tagging, CCTV, etc.)

– Enabling better retailer/supplier collaboration• Designing shrinkage out of new products• Pay-on-scan

– Continue ECR Europe shrinkage seminars:• ECR nationals (Sweden, Finland)• 2 European seminars in 2007 (February & October)


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Next steps for ECR Next steps for ECR Europe supply sideEurope supply side

Future Supply Side Agenda

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• Deliver and implement current projects (OSA, SRP, shrinkage)

• Support implementation of Global Data Synchronisation & Data Quality

• Tackle new topics of wider European interest


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• Deliver and implement current projects (OSA, SRP, shrinkage)

– Via national ECRs and with help from ICI– Via companies implementing recommended

best practices and not just talking about them– Via ECR Executive Board members

promoting ECR approach in their companies


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GDS - Role of ECR EuropeGDS - Role of ECR Europe– Support implementation of

GDS based on 3 ‘Golden Rules’

– Support piloting and implementation of global data quality framework


Use the Global

Infrastr

ucture

Get Your Information

Right

Eng

ag

e

wi th

your

Part n

ers

Collaborative GDS

Data Quality

Framework

Data Quality

Framework

•Company responsibility to implement•ECR Europe to promote GDS through:

annual conference, existing ECR projects

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Possible new topicsPossible new topics


Transport – responsible and effective use of means of transport

Returnable asset management (pallets, crates)

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Transport – current situationTransport – current situation

– Retailers and manufacturers will have to work within increasing constraints: rising fuel prices, capacity shortages, environmental concerns (Kyoto), road user charges, higher transport rates, reduction of driving hours, week-end driving restrictions, urban access restrictions, etc.

– European Commission is proposing action on several transport fronts, including freight logistics (2007)

– ECR Europe has released recommendations on transport optimisation, BUT these are not implemented consistently (e.g. unit loads design for better vehicle fill, joint warehousing & delivery programmes, alternative modes of transport, etc.)

– Various piece-meal transport optimisation programmes underway between individual companies


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Transport – proposed ECR actionTransport – proposed ECR action

– Review existing ECR Europe transport-related recommendations and identify gaps

– Set priorities for concrete implementation programmes for topics with highest potential

(Support from ICI and national ECRs needed)

– Influence EU Commission activities by establishing a dialogue and providing input


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Returnable asset management – current Returnable asset management – current situationsituation

– Pallet market is working with two basic scenarios: centrally managed pallet pools (e.g. CHEP) or exchange system (white pallet) – both are currently not satisfactory: high costs, questionable pallet quality, pallet losses, inefficient return logistics – often a result of non-cooperation between manufacturers and retailers.

– Market for other returnable assets (crates) also fragmented and return logistics are an issue

– ECR Europe has released recommendations on design and management of returnable assets under guidance of International Council for Reusable Transport Items (IC-RTI), but IC-RTI no longer exists


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Returnable asset management – Returnable asset management – proposed ECR Europe actionproposed ECR Europe action

– Launch a debate on returnable asset management• Review current systems• Identify shortcomings• Agree on necessary improvements• Agree on respective roles of manufacturers, retailers and

asset providers


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StrengthsStrengths• Active supply side co-

chairs & project teams• Proven ECR blue book

track record• Good number of “hot

topics”• Supply side community is

open and pro-active to address industry issues

• Focused on implementation

WeaknessesWeaknesses• Company execution of agreed

best practices • Scarce resources for project

team participation on the retail side

• Alignment with activities/recommendations of national ECRs

Supply Side activities – strengths & weaknesses

1 draft presentation to new ecr co- chairs for meeting on 13 september 2006 for discussion at...

Documents

shelf ready packaging

wayoptimal shelf availability

ready merchandised unit

supply chainecr europe

total grocery sales

bn sales loss

bn planet retail oos

ecr community