scott craig - delhaize america mark lyktey and jason gintert - pepsico warehouse delivered

Scott Craig - Delhaize AmericaMark Lyktey and Jason Gintert - PepsiCo Warehouse Delivered

January 2012

Improve Store In-Stock Rates

Reduce Supply Chain Costs

Reduce Overall Inventory

Customer Demand Driven Replenishment

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

4

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.

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

Pepsi Plant Pepsi DC Food LionStore

Vendor Managed Inventory (VMI)

Food Lion Warehouse

What is standard VMI:

Reduce Supply Chain Costs by

0.5%

Increase Store In-

Stock Rates by 0.75%

Decrease Food Lion overall

Inventory by 5%

VMI Pilot Goals - Penetrate to Store

PilotUpstream Supply Chain

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

POS Impact

Pepsi DC Food Lion Store

Customer Replenishment Planning

Food Lion Warehouse

POS identifies trends 3 days faster

Pilot

• 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

Store to DC every 2 to 4 days

DC to DC 1 day

Headlines:

POS Promotional Sales Growth

Day 1

50%

50%

Day:

Planned Deliver

y

Actual Deliver

y

Day 4 Day 7 Day 10 Day 13 Day 16 Day 19 Total

30%

30%

20%

20%In S

tock

Effi

cienc

y

Event POS Overselling

Headlines:

• Sales Growth through higher in-stock• Customer Demand Driven Replenishment based of POS• POS data yields information to support decisions

100%

110%

111%

+10%

Net Gain: Promotional Event Oversell

POS Inventory EfficiencyIn

vent

ory

Efficie

ncy

Promotional Event Undersell

Headlines:

• POS data yields information to support decisions

• Inventory Efficiency• Fewer Returns/Expired

Day 1

50%

50%

Day:

Planned Deliver

y

Actual Deliver

y

Day 4 Day 7 Day 10 Day 13 Day 16 Day 19 Total

30% 20%

15%

Event POS Undersell

100%

70%

57%

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

Store Inventory Effect

Pepsi DC Food Lion Store

Customer Replenishment Planning

Food Lion Warehouse

Pilot

X Days total network

Y Days WarehouseGo

al

X - 2 days Y - 2 daysVMI

Traditional VMI shipped promo + 2Ship

X + 2 days Y - 2 days Z + 4 daysPilo

t

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 DataEnhanced VMI

DC Inventor

y

Forecast

Safety Stock

Headlines:

DC Inventor

y

Forecast

Safety StockPOS

Store Inventor

y

DC Warehouse Withdrawals

DC Warehouse Withdrawals

Customer Demand Driven

Replenishment (CDDR)

DC Customer

Replenishment

Return/Expired2nd Quarter Total POS Store In Stock DC On Hand Store On Hand Total On Hand Reclaim

2010 vs. 2011 +36.11% +0.82% -32.24% +16.66% -14.74% -0.63%

Sales Growth Inventory Efficiency

• Sales Growth• Inventory Efficiency• Enhance replenishment• Enhance promo forecast

Pilot Goals

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

Q2 Inventory Tracking

Q2 Distribution Center Inventory

Reduction

32.24%

1 2 3 4 5 6 7 8 9 10 11 12 13

Inve

ntor

y Ca

ses

PepsiCo Week

Food Lion Gatorade Tracker Summary

2010 DC On Hand 2011 DC On Hand

April May June

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

1 2 3 4 5 6 7 8 9 10 11 12 13

1 2 3 4 5 6 7 8 9 10 11 12 13

2010 2011

Point of Sale

2.05%

20.9%

2010 vs. 2011 Results by Period

Reclaim

1 2 3 4 5 6 7 8 9 10 11 12 132010 2011

1 2 3 4 5 6 7 8 9 10 11 12 13

DC on Hand

15.5%

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

What’s Next

Collaboration

Blue Printing

Proof of Concept

Automation

Expansion

• Q1 2011• Brainstorm VMI Enhancements• Manufacturer/Retailer jointly devise strategy

• 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

• Q2 2012• Expand automated processes• Roll Out to all Delhaize lanes• Measure & Publish Results

Demand Intelligence

• • Jointly Grow Sales• Improve Inventory Utilization • Increase Collaboration• Anticipate Customer Demand• Build Efficiencies

Goals