Action for Improving Supply Chain Efficiency

- A Report to ECR China Board

Supply Chain Efficiency Committee, ECR China Zhengzhou, Nov 6th, 2008

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1. Action Plan

Order Fulfillment Improvement

Improve Supply Chain efficiency by enhancing order fulfillment, focusing on fill rate and lead Time reliability.

Supply Chain Standard Development

Improve Supply Chain efficiency by driving the development of standards including pallet, truck and dock standards.

Action plan made in May and updated in Oct

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2. Implementation Review – Order Fulfillment Improvement

Define & Align Order Fulfillment KPI (by Apr 2008)

Define KPIs (Fill Rate / Lead Time Reliability).Align on KPI data source & calculation.

details

Analyze KPI to list reasons & approaches (by May 2008) Share KPI from Supplier & Retailer side. Identify root reasons for unqualified performance. Workshop for listing key reasons and proposed

approaches for improvement focusing on various functions.

details

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Implement improvement approaches with pilot committee members (May 10th – Oct 2008)

Jointly implement the approaches in pilot retailers

and suppliersMonitor progress and share information among pilot

members on regular baseReview and wrap-up the pilot implementation

2. Implementation Review – Order Fulfillment Improvement

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Pallet standardization chosen as 1st focus (Oct)

Palletization of logistics operation agreed as the near future development orientation

1.2 X 1.0m regarded as the most preferred pallet size

Members agreed to suggest to the standard when new stores or DCs opening

Key players from the market needed for driving the change - international suppliers preferred for the leadership

2. Implementation – Standards Development

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3. Next Step – Order Fulfillment Improvement

Deploy updated approaches to all committee members (Nov 2008 – May 2009)

Update the approaches based on the conclusion from pilot

implementation

Implement the updated approaches within all committee members.

Promote the concept and solution via ECR (Nov 2008 – Dec 2009) Standardize concept, KPIs and measurement within ECR members.

Promote the solution within ECR for further supply efficiency improvement and extend it to the two industries.

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3. Next Step – Standards Development

Assess current China standards and processes being followed from retailers and suppliers (Feb 09) Via survey completion Areas: Data Flows, Physical Truck, Transportation Systems,

Loading Standards, Receiving Capability

Align on the current and ideal state for each standard (TBD)

Prioritize the areas where the committee will focus (TBD)

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3. Next Step – Standards Development

Develop a plan for testing the focus areas (TBD)

Promote the concept and solution via ECR (TBD)

Standardize concept within ECR members.

Learn from other regions where it makes sense

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3. Next Step – Sub-Committee Work

Participants

Members involved in action plan: Tesco, Nestle, Coca-cola, IBM, P&G, Mengniu Group, Johnson & Johnson, Watson's, Wal-Mart, Metro

Members started implementation: Coca-cola, Nestle, P&G, Colgate, Metro

More members & attentions from company management are needed!

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3. Next Step – Sub-Committee Work

Quarterly review meeting

More chance for communications & professional gathering

More chances for detailed case driven discussion for Supply Chain efficiency enhancement

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Thanks for your attention!

Denny Yang & Leland Jiang

Co-leader of ECR Supply Chain Efficiency Committee

1425 Zhenbei Road, Shanghai 200333, P.R.China

Tel: 021-2207- 8542

Email: yibin.yang@Metro.com.cn

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Back up

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KPIs Formula Data Source Remarks

Fill Rate (FR)

(Order Qty – Short Qty) / Order Qty Metro Goods

Management System (will be MDW in near future)

1. Over delivered Qty is excluded.

2. Calculation is based on actual goods receiving date.

Lead Time

Reliability (LTR)

Late Delivered Qty / Total Delivered Qty

Defined KPI

2. Action Plan & Status

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2. Action Plan & Status

KPI Report (sample)

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1). SupplierResponsibility

taking 50%

Stock Availability

Price / Payment Issue

Quality Issue

Minimum Order Qty (MOQ)

Improper Ordering and Delivery

Period setting

1). Promotion Management 2). Mutually Good Forecasting 3). Harmonized Ordering info.

Communicate with Supplier About Metro Standard

Temporarily block the article in Metro system

1). Review MOQ setting 2). Mutually Good Forecasting 3). Central Order

Review with supplier and update If necessary.

Reason Approach

Key Reasons & Approaches

2. Action Plan & Status

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Store does not Input goods receiving

date in time

Reason

1). Review Ordering related SOP if needed 2). Discipline store ordering behavior by training ect.

Approach

1). Define the main problem (e.g. art. Status) 2). Master Data Clearance Project involving Supplier / Retailer

Incorrect Master Date

Store does not place order

in regulated way

Discipline the goods receiving staff in store via his / her superior

Key Reasons & Approaches

2. Action Plan & Status

2). Retailer

Responsibility

Taking 25%

3). Common Issue

taking 25%