danone vmi presentation ecr 2010
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VMI as technology to improve OSA
and to contribute growth
By Olga Khruscheva, SC Business Planning & Customer Integration Director,APICS CSCP
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Content
Do you feel the difference?
How we do it…
What’s available to influence?
How it might look like?
OSA as a subject for consideration
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What is available on shelf?
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Consumer behavior if wanted product is not on shelf
36%Buys other brand
19%Buys in other
store
20%Buys another
flavor
17%Buys product
later
8%Doesn’t buy at
all
+ = Retailer sales loss
+ = Supplier sales loss
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Danone Belgium OSA Results
Dairy FMCG DANONE Other
A BrandsPRIVATE
LABEL
Carrefour (Hyper) 93% 96,40% 90% 91%
LINEACOM
Colruyt (Hyper) 88% 90% 86% 89%No LINEACOM
Delhaize (Hyper) 94% 95,50% 91% 93%No LINEACOM
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Are our products always available to our shoppers?
ManufacturerManufacturer RetailerRetailer
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Why not apply VMI on Upstream part withsame benefits as upstream ?
FMCGPlant
FMCGPlant
WAREHOUSE OF SUPPLIERWAREHOUSE OF SUPPLIER
STORESTORE
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Improvement on the traditional Preseller model
Order taking
Stock \ FIFO control
Price
Fridge \ POSM
Promo
Promo materials
Focus?
Sales Rep.(50 stores)
Sales Rep.(50 stores)
Focus
Stock takingShelf \ FIFO control
OSA, PPED
Merchandiser(1-3 stores)
Merchandiser(1-3 stores)
Focus
PriceFridge \ POSM
Promo Promo materials
4P
KA Executive(20 stores)
KA Executive(20 stores)
Focus
Stock controlOrder TakingAssortment
Promo managementOOS
VOLUME CONTROL
OSA, PPED
Order Creator(40 stores)
Order Creator(40 stores)
CONTROL AND FOLLOW UP
CONTROL AND FOLLOW UP
CONTROL AND FOLLOW UP
CONTROL AND FOLLOW UP
SALES SC
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• Development, testing IT ordering tool• Creating Central ordering team • Creating Key Account executive team• Merchandizers team• Start stock counting• After 6 weeks of history – start ordering
Main changes in process
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Billa is company for customers
One of the leaders in Europe Retail market, founder in 1924 and being
presented by 69 supermarkets and 3 hypermarkets in Russia since 2004 year.
Mission statement• It is all about our customers• Innovations and changes develop our business• Best partner for our suppliers
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1. Stock & Sales integration
2. Sales Estimation based on Trends & Future Events (National/Regional)
3. Order Validation/Modification based on Store Specificities
Distribution Centre
Lineacom Principles
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Basic Forecasting principles
Based on the cleaned sales history an estimation for the next sales period is made.This estimated sales is influenced by:
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Basic Order principles
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Basic Order principles
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ForecastingAlgorithmes
• Base Forecast
Moving Average 4 or 8 weeks Flat
Moving Average 4 or 8 weeks Trend
• Promotional Uplift
Specific behaviour
Pre-Bon On Pack (Lower Safety Stock)
Bon On Packs (Uplift)
Post Bon Pack (Sell-Out)
• Innovations
Align product with Benchmark
Combine Benchmark with Real Sales
• Stops
Adapted Safety Stocks
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Basic Order principles
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245
-165
-480590
-225
-600725
400
Begi
n St
ock
P1
Del
iver
y P1
Sale
s Fo
reca
stP1
Shor
t She
lflife
Corr
ectio
n P1
Prop
osed
Del
iver
y P2
Sale
s Fo
reca
stP1
Shor
t She
lflife
Corr
ectio
n P2
End
Stck
P2
Short Shelflife Stock Correction
Sales Order = (Sales Forecast)*(Safety stock Policy) – (Begin Stock + Delivery P1 – Short Shelflife Correction)
Quantity of Products already in Store Stock where Shelflife is too
low to sell in Period
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Basic Order principles
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Safety Stock
• Defined by Product / Store Combination• Dynamic & Automatic based on Sales Forecast (% of
Period(s) to Cover)• Alignement with Business Strategy• Alignement with Customer Expectations
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• FOCUS on Dairy, No High Performaning Tool available on market.
• IMMEDIATE & FULL listing of INNOVATIONS• TRUST in Quality by working with dedicated and
experienced PEOPLE • HIGHLY REACTIVE in a Fast Moving Environment
Why VMI by Danone?
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Billa: something to compare
2. OSA in Billa stores with Central
OrderingOSA 93,0%
OOS 7,0%
1. OSA in Billa stores w/o Central
OrderingOSA 83,3%
OOS 16,7%
OSA83,3%
OSA93,0%
OOS16,7%
OOS7%
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Billa: something to compare
Vertical Growth in Billa, 2009 vs 2010Vertical Growth in Billa, 2009 vs 2010
16,7%8,7%
No central ordering
No central ordering
Central orderingCentral
ordering
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OSA is well contributed for growth
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Thank you!Moscow, 2010