INDUSTRY INDUSTRY ASSOCIATIONSASSOCIATIONS

Efficient Foodservice ResponseEfficient Foodservice Response

September 24, 1998September 24, 1998

Presented by: Co-Chairs, Canadian EFR Steering CommitteePresented by: Co-Chairs, Canadian EFR Steering Committee

Peter McLaughlin, President, Clover GroupPeter McLaughlin, President, Clover GroupGord Wilson,General Manager, Nabisco Out of Home Gord Wilson,General Manager, Nabisco Out of Home

Channels DivisionChannels Division

EFR Completes the Food EFR Completes the Food Supply Chain PuzzleSupply Chain Puzzle

Efficient Consumer ResponseEfficient Consumer Response

Quick ResponseQuick Response

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Efficient Foodservice ResponseEfficient Foodservice Response

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Canadian EFRCanadian EFR Vision Vision

• To facilitate a more competitive, To facilitate a more competitive, demand-driven foodservice supply demand-driven foodservice supply chain, by encouraging adoption of chain, by encouraging adoption of recommended Best Practices for recommended Best Practices for

industry-wide processesindustry-wide processes

EFR Motivators (Why EFR Motivators (Why do we need it?)do we need it?)

FoodserviceFoodserviceSupply Supply ChainChain

Eroding Eroding Profit Profit

MarginsMargins

Time Poor,Time Poor,Value ConsciousValue Conscious

ConsumerConsumer

Channel Channel BlurringBlurring

Lack of Basic Lack of Basic CapabilitiesCapabilities

Non-Non-TraditionalTraditionalCompetitioCompetitio

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New New Technology Technology

EnablersEnablers

Adversarial Adversarial RelationshipsRelationships

Synergy with ECR, timing is Synergy with ECR, timing is right!right!

OperatorOperatorLaborLabor

Why should weWhy should we do EFR? do EFR?

• 1996 KPMG supply 1996 KPMG supply chain review concluded:chain review concluded:– 52 days of inventory in 52 days of inventory in

the supply chain the supply chain

– Supply chain technology Supply chain technology not well usednot well used

– Potential savings: $400 Potential savings: $400 million (Canada)million (Canada)

• 1997 U.S. study -- $14 1997 U.S. study -- $14 billion annual savingsbillion annual savings

Savings share by segment (U.S.)(Source: 1997 FDI EFR Report)

36%

35%

28%

1%

Manufacturer Distributor Operator Broker

Process in CanadaProcess in Canada

•- Steering Committee comprised - Steering Committee comprised of manufacturers, distributors, of manufacturers, distributors, operators, brokersoperators, brokers•- 4 “project” committees each co-- 4 “project” committees each co-chaired by manufacturer & chaired by manufacturer & distributordistributor•- EFR Steering Committee aligned - EFR Steering Committee aligned with ECR Steering Committee;with ECR Steering Committee;- share learnings, avoid duplication, - share learnings, avoid duplication,

share resourcesshare resources

•- 4 sponsoring associations - 4 sponsoring associations (secretariats & resource support)(secretariats & resource support)•- Co-operative alliance with U.S. - Co-operative alliance with U.S. EFR initiativeEFR initiative

EFR ECR

Product ID Bar Code

Electronic Commerce

Supply Chain Demand Forecasting

Education/Communication

FCPMC

CCGD

CFBA

ECCC

U.S. EFR

Principles ….Principles ….

•Agenda based on common enablers pertinent Agenda based on common enablers pertinent to all companies, irrespective of size or sector.to all companies, irrespective of size or sector.

•Companies to “pilot” recommendations to Companies to “pilot” recommendations to identify implementation issues and critical identify implementation issues and critical success factors.success factors.

•Participating companies to set an example by Participating companies to set an example by implementing EFR recommendations.implementing EFR recommendations.

What are What are we doing?we doing?

4 EFR Committees4 EFR Committees

1.1. Product Identification/BarcodesProduct Identification/Barcodes

2.2. Electronic CommerceElectronic Commerce

3.3. Supply Chain Demand Supply Chain Demand ForecastingForecasting

4. 4. Communications and EducationCommunications and Education

•Three project committees to:Three project committees to:

– assess situation in foodservice industry through surveys, assess situation in foodservice industry through surveys, etc. (form hypotheses, assumptions)etc. (form hypotheses, assumptions)

– conduct pilots and/or studies to determine “business conduct pilots and/or studies to determine “business case”, critical success factors, barriers to implementation case”, critical success factors, barriers to implementation

– publish “best practice” recommendations in report to publish “best practice” recommendations in report to industryindustry

– scorecard and benchmarkscorecard and benchmark

What are What are we doing?we doing?

Product Identification/ Product Identification/ BarcodesBarcodes

ObjectiveObjective::•To implement and use standard product To implement and use standard product identification codes as per industry (ECCC) standards identification codes as per industry (ECCC) standards and guidelines, including barcodes on SKUs, cases and guidelines, including barcodes on SKUs, cases and pallets.and pallets. Guiding Principle:Guiding Principle:•Use accurate and timely information in a computer-Use accurate and timely information in a computer-based system to support effective marketing, based system to support effective marketing, production and logistics decisions.production and logistics decisions.

Product Identification/Product Identification/BarcodesBarcodes

Action:Action:

1. Reviewed standards and ECR best practices1. Reviewed standards and ECR best practices

2. Mapped out business requirements to identify 2. Mapped out business requirements to identify gaps for foodservicegaps for foodservice

3. Surveyed industry (April) to understand level of 3. Surveyed industry (April) to understand level of barcode activity and implementation readinessbarcode activity and implementation readiness

4. Established recommended industry 4. Established recommended industry implementation timelineimplementation timeline

5. Publishing “Barcoding Basics” report5. Publishing “Barcoding Basics” report

Recommendation:Recommendation:

– UPC and SCC-14 numbers assigned to all products UPC and SCC-14 numbers assigned to all products and cases, price lists updated, by October 31, 1998and cases, price lists updated, by October 31, 1998

– All cases marked with scannable barcodes by October All cases marked with scannable barcodes by October 31, 199931, 1999

– Major distributors to sign-off and send letter to Major distributors to sign-off and send letter to suppliers requesting compliancesuppliers requesting compliance

•Endorsed by EFR Steering Committee, FCPMC Endorsed by EFR Steering Committee, FCPMC Foodservice members, CFBAFoodservice members, CFBA

Product Identification/Product Identification/BarcodesBarcodes

Electronic Electronic CommerceCommerce

Objective:Objective:

•To integrate Electronic Commerce (EDI) into To integrate Electronic Commerce (EDI) into common business practices, from the order common business practices, from the order through to reconciliation.through to reconciliation.

ElectronicElectronicCommerceCommerce

Action:Action:

1. 1. Survey of foodservice manufacturers, operators and Survey of foodservice manufacturers, operators and distributors conducted. Information session for distributors distributors conducted. Information session for distributors held (April);held (April);

22. Pilots/projects underway: - Lipton/SERCA; . Pilots/projects underway: - Lipton/SERCA;

Lynch/Gordon; Cara/Summit/NabiscoLynch/Gordon; Cara/Summit/Nabisco

Business case (based on ABC analysis) being developed for Business case (based on ABC analysis) being developed for eacheach;;

3. Technical analysis of applicability of VICS 4010 to 3. Technical analysis of applicability of VICS 4010 to foodservice being done foodservice being done

Supply Chain Supply Chain Demand ForecastingDemand Forecasting

Objective:Objective:

•To develop communication and information To develop communication and information sharing guidelines (bar coding, EDI, demand data sharing guidelines (bar coding, EDI, demand data sharing, etc.) that facilitate trading partner sharing, etc.) that facilitate trading partner planning processes and results in the reduction of planning processes and results in the reduction of waste/cost throughout the supply chain.waste/cost throughout the supply chain.

Action:Action:

1. 1. Extensive list of issues affecting the ability to Extensive list of issues affecting the ability to effectively forecast developed:effectively forecast developed:

2. Three separate Manufacturer/Distributor pilots 2. Three separate Manufacturer/Distributor pilots established to test hypotheses regarding key issues of established to test hypotheses regarding key issues of SCDF effect on inventory levels and communication;SCDF effect on inventory levels and communication;

3. Study conducted to identify operators’ perspectives 3. Study conducted to identify operators’ perspectives regarding EFR, technology, and SCDF-related issuesregarding EFR, technology, and SCDF-related issues

Supply Chain Supply Chain Demand ForecastingDemand Forecasting

Education &Education &CommunicationsCommunications

Objectives:Objectives:

•To communicate progress and promote To communicate progress and promote participation in EFR initiatives to all participants in participation in EFR initiatives to all participants in the foodservice supply chain through trade media the foodservice supply chain through trade media and associations.and associations.

Action:Action:

1. Extensive mailing list 5,000+ of key audiences developed 1. Extensive mailing list 5,000+ of key audiences developed (operators, distributors, manufacturers, media, associations,etc.)(operators, distributors, manufacturers, media, associations,etc.)

2. Associations actively spreading news (newsletters, events, 2. Associations actively spreading news (newsletters, events, press releases): CRFA to support communicatingpress releases): CRFA to support communicating

3. Updates given at industry conferences/events: 3. Updates given at industry conferences/events:

- September 24 session at ECR Conference - September 24 session at ECR Conference

- February 15 EFR Conference- February 15 EFR Conference

4. Series of fax bulletins initiated4. Series of fax bulletins initiated

5. Presence on Web (through ECR)5. Presence on Web (through ECR)

Education &Education &CommunicationsCommunications

SummarySummary

•Work in progress--12 - 18 month timeframe to Work in progress--12 - 18 month timeframe to complete recommendationscomplete recommendations

•Regular progress reports through associations, Regular progress reports through associations, foodservice eventsfoodservice events

•Quarterly Steering Committee meetingsQuarterly Steering Committee meetings

•Seek more operator involvement on all four Seek more operator involvement on all four committeescommittees

ConclusionConclusion

““The future just ain’t what it used to be”The future just ain’t what it used to be”

Yogi BerraYogi Berra