Transcript Supply Chain Big Bets Customer Demand Driven Replenishment
Customer Demand Driven Replenishment
Improve Store In-Stock Rates Reduce Overall Inventory Reduce Supply Chain Costs
Scott Craig - Delhaize America Mark Lyktey and Jason Gintert - PepsiCo Warehouse Delivered
January 2012
Agenda
Supply Chain Big Bets Case Study Defined POS Impact Store Inventory Impact Customer Demand Driven Replenishment Q2 Inventory Tracking Year on Year Inventory Tracking What’s Next
Supply Chain Big Bets
Customer Demand Driven Replenishment
Business Benefits (Source: Retail Solutions, Inc)
12% To 27% Lower DC Inventory 21% To 77% Decrease In DC Out Of Stocks 20% Decrease In Store Level Out Of Stocks
Delhaize Piloted Program With Another CPG Vendor
Forecast Accuracy Improved By 30% Met Or Exceeded All Goals
Estimated Inventory Reduction 30%
Predecessor - Rapid Replenishment Upside Includes Increases In Stock, Reduces Reclaim, Etc.
4
Agenda
Supply Chain Big Bets Case Study Defined POS Impact Store Inventory Impact Customer Demand Driven Replenishment Q2 Inventory Tracking Year on Year Inventory Tracking Year on Year Inventory Tracking
Case Study Defined
What is standard VMI
:
Upstream Supply Chain Pepsi Plant Vendor Managed Inventory (VMI) Pepsi DC Food Lion Warehouse Pilot Food Lion Store VMI Pilot Goals - Penetrate to Store Decrease Food Lion overall Inventory by 5% Increase Store In- Stock Rates by 0.75% Reduce Supply Chain Costs by 0.5%
Agenda
Supply Chain Big Bets Case Study Defined POS Impact Store Inventory Impact Customer Demand Driven Replenishment Q2 Inventory Tracking Year on Year Inventory Tracking What’s Next
Pepsi DC
POS Impact
Customer Replenishment Planning
Food Lion Warehouse
Pilot
Food Lion Store
DC to DC 1 day Store to DC every 2 to 4 days POS identifies trends 3 days faster
Headlines:
• • • POS accelerates customer demand visibility to the manufacturer Able to react within the promotional period Provides a better more accurate demand signal that can be leveraged through the Supply Chain
POS Promotional Sales Growth
Net Gain: Promotional Event Oversell Day: Day 1 Planned Delivery Event POS Actual Delivery 50% 50% Day 4 Day 7 Day 10 Day 13 Day 16 Day 19 30% 30% Overselling 20% 20% +10%
Headlines:
• • •
Sales Growth through higher in-stock Customer Demand Driven Replenishment based of POS POS data yields information to support decisions
Total 100% 111% 110%
POS Inventory Efficiency
Promotional Event Undersell Day: Day 1 Planned Delivery Event POS Actual Delivery 50% 50% Day 4 Day 7 Day 10 Day 13 Day 16 Day 19 30%
Undersell
15% 20% 5% Total 100% 57% 70%
Headlines:
• • •
POS data yields information to support decisions Inventory Efficiency Fewer Returns/Expired
Agenda
Supply Chain Big Bets Case Study Defined POS Impact Store Inventory Impact Customer Demand Driven Replenishment Q2 Inventory Tracking Year on Year Inventory Tracking What’s Next
Store Inventory Effect
Customer Replenishment Planning Pepsi DC Food Lion Warehouse
Pilot
Food Lion Store
X Days total network X - 2 days Y Days Warehouse Y - 2 days Traditional VMI shipped promo + 2 X + 2 days Y - 2 days
Z + 4 days
Agenda
Supply Chain Big Bets Case Study Defined POS Impact Store Inventory Impact Customer Demand Driven Replenishment Q2 Inventory Tracking Year on Year Inventory Tracking What’s Next
Customer Demand Driven Replenishment
Pre-Pilot Conventional VMI Pilot Data Enhanced VMI DC Inventory DC Customer Replenishment DC Warehouse Withdrawals Forecast Safety Stock Pilot Goals DC Inventory • • • •
Sales Growth Inventory Efficiency Enhance replenishment Enhance promo forecast
Store Inventory POS Headlines : Customer Demand Driven Replenishment (CDDR) Forecast Safety Stock DC Warehouse Withdrawals 2nd Quarter 2010 vs. 2011
Sales Growth
Total POS
+36.11% +0.82% -32.24% Inventory Efficiency
Store In Stock DC On Hand Store On Hand Total On Hand
+16.66% -14.74% Return/Expired
Reclaim
-0.63%
Supply Chain Big Bets Case Study Defined POS Impact Store Inventory Impact Customer Demand Driven Replenishment Q2 Inventory Tracking Year on Year Inventory Tracking What’s Next
Agenda
Q2 Distribution Center Inventory Reduction 32.24%
Q2 Inventory Tracking
Food Lion Gatorade Tracker Summary
1 2 4 5 6 7 May
PepsiCo Week
8 9 10 2010 DC On Hand 2011 DC On Hand 12 13
Agenda
Supply Chain Big Bets Case Study Defined POS Impact Store Inventory Impact Customer Demand Driven Replenishment Q2 Inventory Tracking Year on Year Inventory Tracking What’s Next
2010 vs. 2011 Results by Period
Store In Stock 2.05% Point of Sale 20.9%
1 2 3 4 5 6 7 8 9 10 11 12 13 1 2 3 4 5 6 2010 7 8 2011 9 10 11 12 13
2010 vs. 2011 Results by Period
DC on Hand 15.5% Reclaim 0.5%
1 2 3 4 5 6 7 8 9 10 11 12 13 1 2 3 4 5 6 2010 7 8 2011 9 10 11 12 13
Agenda
Supply Chain Big Bets Case Study Defined POS Impact Store Inventory Impact Customer Demand Driven Replenishment Q2 Inventory Tracking Year on Year Inventory Tracking What’s Next
What’s Next
Goals • • • • • •
Jointly Grow Sales Improve Inventory Utilization Increase Collaboration Anticipate Customer Demand Build Efficiencies
Proof of Concept Expansion
• Q2 2012 • Expand automated processes • Roll Out to all Delhaize lanes • Measure & Publish Results
Automation
• Q1 2012 • Apply automation & enable EDI 830 • Enhance Processes • Perfect on Food Lion Gatorade lanes • Q2, Q3 & Q4 2011 • Manually perform Customer Demand Driven Replenishment • Enhance Processes • Measure & Publish Results
Blue Printing
• Q1 2011 • Brainstorm VMI Enhancements • Manufacturer/Retailer jointly devise strategy