ecr ap award integration of logistics distribution drives supply chain optimization by metro, pg,...
TRANSCRIPT
Copyright © 2009 METRO Cash & Carry China Member of METRO Group
Integration of Logistics Distribution Drives Supply Chain Optimization -- Collaboration among producer, retailer, and 3PL to drive change in FMCG & retail industry
METRO, P&G, Unilever, Vinda, UPM, Supor, and Sinotrans Logistics
Shanghai, China August, 2011
Member of METRO Cash & Carry China Page 2 2
Food Retail Self-service Wholesale
Nonfood
Specialty
Department
Stores
Buying (MGBI) Logistics (MGL)
Advertising (MGA)
Real Estate (MAM)
IT (MGI)
METRO GROUP
2,200+ outlets in 33 countries
Over 280,000 employees
2011 sales 67 billion Euros
METRO Cash & Carry
700+ stores in 30 countries
Over 120,000 employees
2011 sales 31 billion Euros
METRO Cash & Carry - A Core Brand of METRO Group
Company Introduction
Member of METRO Cash & Carry China Page 3
Strong Foothold across China
METRO Cash & Carry China
Market Entry: 1995
54 stores in 39 cities across
China with 3 investment focus:
Bohai Bay, Yangtze River Delta,
Pearl River Delta
8,500+ employees
3 million professional customers
2011 sales 1.5 billion Euros
Shanghai (HQ)
Company Introduction
Member of METRO Cash & Carry China Page 4
Focus on Professional Customers
Hotels
Restaurants
Caterers
Cafes & pubs
Lorem ipsum Dolor sit Lorem ipsum Dolor sit Lorem ipsum Dolor sit HoReCa Trade SCO
Small retailers
Kiosks
Petrol stations
Street markets
Social services
Companies
Offices
Company Introduction
Member of METRO Cash & Carry China Page 5 Page 5
Tailor-made to the specific needs of our professional customer
Each brand provides complete solutions as basis for successful business
Own Brands: Focus on Top 6 Brands
Company Introduction
Member of METRO Group METRO Cash & Carry China
Innovative Ideas
Page 6
1. With its newly established distribution network, retailer integrates producers’ existing
distribution (cover all METRO stores and over 1000 producers/suppliers integrated)
1. Logistics distribution integration drives overall supply chain optimization (started from
logistics distribution integration, whole OTC process covered)
2. Collaboration among producer, retailer, and 3PL to drive change in FMCG industry
Member of METRO Group METRO Cash & Carry China
Content
Case Background:
Logistics Distribution Integration Needed for Supply Chain Excellence
Logistics Distribution Integration:
Driving Supply Chain Optimization of METRO, P&G, Unilever, Vinda, UPM, Supor, and
Sinotrans Logistics
Further Implementation Plan: Becoming an Engine of Supply Chain Excellence in the
Industry
Page 7
Member of METRO Group METRO Cash & Carry China Page 8
In China, most big producers already have their distribution network, while recently many retail giants have started to build up their own distribution network.
Any chance to integrate the distribution networks and build up the supply chain excellence for both parties?
Case Background
Member of METRO Group METRO Cash & Carry China Page 9
Challenge: Can big producers’ existing distribution be integrated into retailer’s distribution network?
Producer/Supplier Retailer/
Wholesaler
Retailer/ Wholesaler
Producer/Supplier Distribution System
Distributor Distributor
Logistics System
Producer/Supplier Retailer/
Wholesaler
Retailer/ Wholesaler
Producer/Supplier Distribution System
Distributor Distributor
Logistics System
Integrated Distribution
System
Member of METRO Group METRO Cash & Carry China Page 10
Opportunity: Logistics Distribution Integration Enable Supply Chain Excellence
Improved and well-controlled logistics service:
punctuality, traceability, reliability
Leaned supply chain & better chance for profitability for both parties: no need for distributor
Enhanced quality and quantity control
Simplified and efficient ordering, order processing,
invoicing, payment & administration
Overall enhanced cost effectiveness for both sides
Efficient goods receiving at DC & store
Shelf Ready Package Backhaul sharing & pallet
delivery
RFID and EDI Master Data and GDSN
Member of METRO Group METRO Cash & Carry China
Content
Case Background:
Logistics Distribution Integration Needed for Supply Chain Excellence
Logistics Distribution Integration:
Driving Supply Chain Optimization of METRO, P&G, Unilever, Vinda, UPM, Supor, and
Sinotrans Logistics
Further Implementation Plan: Becoming an Engine of Supply Chain Excellence in the
Industry
Page 11
Member of METRO Group METRO Cash & Carry China
P&G is a Company of Brands P&G Growth Strategy
Touching and improving more consumers’ lives in
more parts of the world more completely
Member of METRO Group METRO Cash & Carry China
Case I: P&G and METRO - Operation Model Change:
Page 13
METRO Store
METRO Store
METRO Store
P&G DC
P&G DC
P&G DC
P&G Plant
P&G Plant
METRO Store
METRO Store
METRO Store
P&G DC
P&G DC
P&G DC
P&G Plant
P&G Plant
METRO DC
Member of METRO Group METRO Cash & Carry China Page 14
Achievements
• P&G and METRO: Increase of on-time delivery (+3.1%), decreased quantities of order (-70.9%) and invoice (-94.2%)
•P&G and METRO: Better chance and flexibility (e.g. to consolidate goods via multiple DCs) to serve business of urgent orders, promotion, peak season and etc.
Case I: P&G and METRO - Performance Improvement
• P&G and METRO: Enable further supply chain optimization (e.g. palletized delivery, selective check, speed-up store goods
receiving and etc.)
• P&G: Simplified and efficient OTC processing (order, invoice and payment, -19% workload) and days (-1day)
• P&G: Shorter stock days even with P&G supply term change (-2days)
• METRO: Order scale increase helps to gain more discount from P&G (+15.4%)
0 200 400 600 800 1000 1200 1400
after
before
Invoice Consolidation 发票整合 Order Consolidation 订单整合
number of invoice decreased 94.16%
number of order decreased 70.90%
Member of METRO Group METRO Cash & Carry China Page 15
Excellent Collaboration in Supply Chain Management between P&G and METRO China
• Set-up quarterly supply chain top2top meeting and identify improvement opportunity & plan
• Jointly won ECR (Efficient Consumer Response) China Golden Award by order fulfillment improvement project
• Started distribution integration in Eastern China and 40% of METRO volume covered
• Jointly won ECR China Platinum Award again by logistics integration project
• Built up EDI link at order level and strongly support the business development and supply chain performance improvement
• Jointly won ECR China Platinum Award jointly by integrated information flow project
• Extend distribution integration cross the country
• Extend EDI link at dispatch and receive advice levels
• Fully implement automatic GDSN
• Introduce palletized distribution
2013-2015
• Optimization of logistics distribution, e.g. rolling out palletized distribution, shelf unloading, GR optimization, backhaul sharing, etc.
• Innovation for overall Supply chain performance improvement, e.g. optimized order proposal, shelf-ready-package, joint planning and forecasting, etc.
• Target: leader in excellent supply chain collaboration in FMCG & retail industry
2009 2010 2011 2012
Major Supply Chain KPI Status (2009 - May, 2012)
Member of METRO Group METRO Cash & Carry China
in China (refer to as “UL” below)
Page 16
• In 1923, Lever Brother established its soap business in Shanghai
• In 1986, Unilever restructured itself in China
• Now, China has become one of Unilever’s strategic focus in developing and emerging market
- Over 5,000 local employees
- Provide more than 20,000 job opportunities
- Largest production base in Group
- A global research centre
- A global purchase centre
We now have
Member of METRO Group METRO Cash & Carry China
Supply Chain and Sustainability
Page 17
environmental impact
business growth
Collaboration is key
It is to double the size of Unilever while at
the same time reducing our environmental
impact
Member of METRO Group METRO Cash & Carry China
Unilever Distributor
Case II: Unilever and METRO - Operation Model Change:
Page 18
Unilever Plant cold-chain
METRO DC cold-chain
METRO Store (in some regions)
METRO Store (in some regions)
Unilever DC cold-chain
Unilever DC cold-chain
METRO Store (in some regions)
METRO Store (in some regions)
Unilever DC ambient
METRO DC ambient
Unilever DC ambient
Unilever Plant ambient
Unilever Plant ambient
Unilever Plant cold-chain
Member of METRO Group METRO Cash & Carry China Page 19
Achievement
• Unilever & METRO: For all sales lines (including
Ice-cream, Food Retail, HPC and Food Solutions)
on-time delivery increases 2.5% and order
fulfillment increases 2.4%
• Unilever & METRO: Quantities of order and
invoice decrease 74.9% and 94.3% individually
• Unilever & METRO: Better logistics support on business increase, especially during promotion and peak season (e.g. CNY)
period
• Unilever & METRO: Explored opportunity of supply chain optimization from both sides (e.g. backhaul transport, inventory
planning, on-shelf availability improvement, pallet delivery and etc.)
• Unilever: Shorter stock days approximately 3 days
• Unilever: Simplified and efficient OTC processing (order, invoice and payment, -15% workload) and days (-3days)
Case II: Unilever and METRO - Performance Improvement
0 500 1000 1500 2000 2500 3000
after
before
Invoice Consolidation 发票整合 Order Consolidation 订单整合
number of invoice decreased 94.26%
number of order decreased 74.97%
Member of METRO Group METRO Cash & Carry China
Case III: Vinda and METRO - Operation Model Change:
Page 20
Vinda Plant METRO DC METRO Store
(in tier 1-2 cities)
METRO Store (in tier 3 cities)
Vinda DC
Vinda Plant METRO Store
(in tier 1-2 cities))
METRO Store (in tier 3 cities)
Vinda DC
Vinda Distributor
Vinda Branch
Member of METRO Group METRO Cash & Carry China
Case III: Vinda and METRO - Performance Improvement
Page 21
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
非准时到货率 Late Delivery 订单满足率 Fill Rate
before after
Achievement
• Vinda & METRO: Consolidated delivery helps logistics distribution cost decrease (-38.3%)
• Vinda & METRO: Good progress of on-time delivery (+5.6%) and fill rate (+5.5%)
• Vinda & METRO: Big improvement on stock control and urgent order fulfillment for bundle pack products from both
wholesaler and producer sides
• Vinda : Good practice on OTC process consolidation. Nowadays, standardized OTC process and related KPI system becomes one
of the benchmarks for Vinda’s other sales channels.
Member of METRO Group METRO Cash & Carry China Page 22
UPM Plant METRO DC METRO Store
(in some regions)
METRO Store (in Eastern China)
UPM Plant METRO Store (in some regions)
METRO Store (in Eastern China)
UPM DC
Case IV: UPM and METRO - Operation Model Change:
Member of METRO Group METRO Cash & Carry China
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
非准时到货率 Late Delivery 订单满足率 Fill Rate
Case IV: UPM and METRO - Performance Improvement
Page 23
before after
Achievement
• UPM & METRO: Consolidated delivery helps logistics distribution cost decrease (-24.0%)
• UPM & METRO: Significant improvement of on-time delivery (+22.6%)
• UPM & METRO: Recognized operation on full-way pallet delivery from plant to stores
• UPM & METRO: Better opportunity to maintain store stocks and balance cost & customer service
• UPM:Decreased administration cost via optimized OTC process
• UPM:Sale growth with better distribution coverage
Member of METRO Group METRO Cash & Carry China Page 24
Supor Plant
Supor Distributor
Supor Branch
Case V: Supor and METRO - Operation Model Change:
METRO Store (in some regions)
METRO Store (in some regions)
METRO Store (in Wuhan)
Supor Plant
METRO Store (in some regions)
METRO Store (in some regions)
METRO Store (in Wuhan)
METRO DC
Member of METRO Group METRO Cash & Carry China
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
非准时到货率 Late Delivery 订单满足率 Fill Rate
before after
Page 25
Case V: Supor and METRO - Performance Improvement
Achievement
• Supor & METRO: Consolidated delivery helps logistics distribution cost decrease (-11.3%)
• Supor & METRO: Trackable step of on-time delivery (+7.7%) and fill rate (+8.4%)
• Supor & METRO: Stable order size and more optimized order frequency
• Supor & METRO: Better business supports during peak season and promotion
• Supor: Remarkable total sales channel cost decrease compared with direct trade and distributor
• Supor: sales expansion resulted from efficient distribution network
Member of METRO Group METRO Cash & Carry China
0%
200%
400%
600%
800%
1000%
Jan
/07
May
/07
Sep
/07
Jan
/08
May
/08
Sep
/08
Jan
/09
May
/09
Sep
/09
Jan
/10
May
/10
Sep
/10
Jan
/11
May
/11
Page 26
•With the operation of METRO’s integrated
distribution network, Sinotrans Logistics entered
into Retail/FMCG contract logistics market in 2007
and developed its business approximately 8 times
during last 4 years
•Today, with the efferent operation and excellent
customer service, Sinotrans Logistics becomes one
of the leading contract logistics service providers in
China and serves many top 500 and well-known
domestic FMCG companies, including Wrigley,
Kimberly-Clark, Kraft & Cadbury, AB Food &
Beverages, LEE KUM KEE, UNI-PRESIDENT, Auchan,
Carrefour and etc.
Case VI: Sinotrans Logistics and METRO - 3PL: growing-up together with retailer’s distribution network
Member of METRO Group METRO Cash & Carry China
0%
100%
200%
300%
400%
500%
600%
700%
2007 2008 2009 2010 May, 2011
Integrated Distribution via METRO Logistics System
Number of Suppliers
Metro Integrated Distribution Share
Number of Suppliers
Page 27
METRO’s Practice in Integrating Distribution Logistics with Suppliers
• Since 2004, METRO China started to build-up its
national logistics distribution network for both
ambient and perishable products
• More than 1000 medium & small suppliers
integrated into METRO’s logistics distribution
networks
• The integrated logistics distribution have
significantly contributed to METRO’s business
and expansion by
Standardized and excellent service
Cost effectiveness
Continuously increased volume
• Relying on METRO’s integrated logistics
distribution, many medium and small suppliers
have their businesses successfully growing and
expanding cross the country
Member of METRO Group METRO Cash & Carry China
Content
Case Background:
Logistics Distribution Integration Needed for Supply Chain Excellence
Logistics Distribution Integration:
Driving Supply Chain Optimization of METRO, P&G, Unilever, Vinda, UPM, Supor, and
Sinotrans Logistics
Further Implementation Plan: Becoming an Engine of Supply Chain Excellence in the
Industry
Page 28
Member of METRO Group METRO Cash & Carry China
Together with other retailers and producers, we’re driving change to build up supply chain excellence in FMCG & retail industry!
Page 29
Member of METRO Group METRO Cash & Carry China
Collaboration Creates Excellent Supply Chain!
© Copyright
This concept is intended only for the purpose of presentation and is the intellectual property of METRO Cash & Carry >Please insert your country. Passing on to third parties as well as the use and exploitation of the presentation either in whole or in part is expressly forbidden. METRO Cash & Carry China
METRO Jinjiang Cash & Carry Co., Ltd.
Procter & Gamble (China) Ltd.
Unilever China
Vinda Trade Co., Ltd.
UPM-Kymmene (Changshu) Paper Industry Co., Ltd.
Wuhan Supor Cooker Co., Ltd.
Sinotrans Logistics Development Co., Ltd.
Contact: Denny Yang
Head of Supply Chain Management & Logistics
METRO Jinjiang Cash & Carry Co., Ltd.
1425 Zhenbei Road, Shanghai 200333, China
Tel: +86 021 2207 8542
Email: [email protected]