Danone Viktoria Central Store

Ordering

Connecting Supplier and Retailer Supply Chains to improve

Shopper Satisfaction

ECR Forum 2011 OSA Case

Shopper Behavior

in case of Out-of-Shelf

36% Buys other

brand

19% Buys in other

store

20% Buys another

flavor

17% Buys product

later

8% Doesn’t buy at

all

+ = Retailer sales loss

+ = Supplier sales loss

Ordering quality is the main reason of

shelf out of stock in Russian Retail

Product on Shelf

82%

Out of Stock

ordering quality 16%

Out of Stock due to in Store

execution issues : Service level, Merchandising

2%

* according to ECR Russia FMCG 2010 Benchmark and

Measurement by Danone

Fresh Dairy product category

peculiarities

Complexity of Management of fresh dairy in-store stock and shelve is

complex

Fast moving goods Almost daily order / delivery to the store

Short shelf life Every minute counts

from Supplier to shopper

What is Value proposal of

Danone for Viktoria ?

… to delegate to DANONE the

management of store replenishment

VMI to improve OSA

FMCG

Plant

WAREHOUSE OF SUPPLIER

STORE

Key principles of VMI: - Stock is managed by Supplier

- Open data

- Orders are made by Supplier

Benefits: - Stock reduction in total SC

- Reducing Bullwhip effect

- Better service level

Danone developed Lineacom : a

specific software to support fresh

dairy product replenishment

We implemented a new sales force

organization focused on service and

excellence of in store execution

Order taking

Stock \ FIFO control

Price

Fridge \ POSM

Promo

Promo materials

Focus?

Sales Rep.

(50 stores)

Focus

Stock taking

Shelf \ FIFO control

OSA, PPED

Merchandiser

(1-3 stores)

Focus

Price

Fridge \ POSM

Promo

Promo materials

4P

KA Executive

(20 stores)

Focus

Stock control

Order Taking

Assortment

Promo

management

OOS

VOLUME

CONTROL

OSA, PPED

Order Creator

(40 stores)

CONTROL AND

FOLLOW UP

CONTROL AND

FOLLOW UP CONTROL AND

FOLLOW UP

CONTROL AND

FOLLOW UP

SALES SC

Traditional pre-sell

model New Model ‘Central Ordering’

Store Order creation process

Count stock and loss

Send stock and loss

information to OC

Enter order to the

customer’s system

Enter stock and loss to the system

Check stock count accuracy

Create order based on history and

promo

Order-fax

- Merchandizer

- Order creator (OC)

Order

- ERP

In store Danone Supply

Chain

Danone order proposal is integrated

automatically to retailer system by EDI

ERP DANONE ERP Viktoria

1. Order proposal

2. Order response Store ordering

system

Lineacom

EDI provider

15%

85%

98%

2%

Store without Central Ordering VMI Central ordering

OSA Shelf OOS

VMI Central Ordering helped dramatically to

increase Sales by increasing OSA

OSA of Danone products in Victoria YTD2011

in Victoria with

Central Ordering OSA 98% Out of stock 2%

in Victoria without

Central Ordering

OSA 85% OOS 15%

While reducing costs by improving by

Execution of in Store Operations thanks

to system integration

Main Operational Improvements achieved

through VMI

In store and back office order entry time decrease

-50%

Human mistakes due to manual order entry

-100%

Elimination of returns caused by discrepancies in order between Danone & Viktoria ERP from

-100%

Reduction of manual rework of delivery documents from 60% to 10%

Danone

X

X

X

X

Victoria

X

X

X

X

ERP DANONE ERP Viktoria

Order proposal

Order response

a Supplier-Retailer Win- Win through

Collaboration

VMI + System Integration

Collaboration

Higher OSA + Better in Store

Execution

Better Business together