ecr europe forum '05. use the ecr scorecard to benchmark and improve your performance

Global Scorecard- ECR Europe Conf 2005 · Page

The Global ScorecardJim Flannery, Procter & Gamble Rita Marzian, Metro GroupCo-Chairs, GCI Scorecard Project

Martin White Langsdale Crook

Pam Stegeman Vice President, Supply Chain and Technology

Grocery Manufacturers of America

August Iwanski CEO, Consumer Goods Council of South AfricaChris Cave Jones Associate Partner, IBM Business Consulting Services


Agenda – “Find out What ECR Can do for You”

What is the Global Scorecard and how can it help me?How does it work?

Key Performance Indicators – the Hard Business ResultsHelp me understand the capabilities.

Show me the benefits ! How Companies and Countries are using the scorecard to improve resultsCase studies

A Challenge from the Scorecard Project team


What is the Global Scorecard?Background on the Scorecard Project

Mission: Create a tool to enable companies to…

Understand performanceCompare results in a common wayEstablish priorities

The tool should be capable of being used…

InternallyCollaboratively

October 1998Wouldn’t it be a good idea

to converge the world’s ECR Scorecards into ONE that could be consistently

used by companies around the world?

March 1999 – AmsterdamFirst Global Scorecard meeting


Scorecard Journey Four Clear ObjectivesA tool capable of supporting single company or joint

engagement

Globally consistentbut “modular” useable in

developing or matureECR situations

More pragmaticlinked to KPIs(day-to-day

management)

SimpleEasy to use


The Global Scorecard – a Capability Assessment tool

- a simple solution to 4 business questions

WWW.GLOBALSCORECARD.NET


1. What is it I want to deliver ?Key Performance IndicatorsImplementation Measures


8 Key Performance Indicators

Category Share – Is the organization achieving the category share desired?Service Level / Unit Fill Rate – Are all items being delivered as ordered?On-Time Delivery – Are goods arriving when expected?Inventory – Have we minimized the amount of inventory needed in the supply chain?On-Shelf / Point-of-Sale availability – Can the consumer purchase the product when they want it?Order to Delivery Lead Time – How responsive are we to changing consumer needs?Distribution costs – Have we optimized the cost of product transportation & storage?Data Synchronization – Do we efficiently get information flow right the first time?


KPI Purpose / Comments Measure Definition Timeframe of measure

Example Where Measured Manuf. Retailer JointScorecard

Internal Scorecards

Service Level / Unit Fill Rate

To measure if the units / items being ordered are being delivered complete as measured by the recipient. This is a case/trading unit/volume measure.Over deliveries and back orders should not be included in this measure.

% Of cases / trading units / volume delivered as ordered

For all cases / trading units / items ordered, the % delivered as ordered. (A volume fill measure)

Use the data systems available from the enterprise. For benchmarking, report the average of these data points over the most recent 6-month period.

A fill measure. (E.g. if 50 cases of item “A” and 75 cases of item “B” were ordered but 50 cases of item “A” and 60 cases of item “B” were delivered. The service level would be 88% - 110/125)

Manufacturer to retailer DC. (for DSD) manufacturer to storeRetailer to Store(for make to order or consumer direct) Manufacturer to Consumer

1 or 3 1, 2 (& 3 if applicable)

1, 2 (& 3 if applicable)

On-Time Delivery

To measure order processing and distribution performance

% Of orders delivered on time.

# Of purchase orders delivered on time divided by the number of orders.“on-time” is based on the recipients agreed delivery window

1700 orders placed, 1560 delivered on-time (per final Purchase Order) = 91.1%

Manufacturer to retailer DC. (for DSD) manufacturer to storeRetailer to Store(for make to order or consumer direct) Manufacturer to Consumer

1 or 3 1, 2 (& 3 if applicable)

1, 2 (& 3 if applicable)

Inventory Measure finished goods inventory in the supply chain. The participant decided how that inventory is “valued” (e.g. cost of goods or sales value) and uses that “value” in the numerator and denominator.

Days “Value” of finished goods inventory divided by the “value” of average daily sales (calculated based on past 6 months history) of these products.

Finished goods inventory Value = $1,000,000Avg. daily sales = $75,000Inventory = 13.3 days(1000000/75000)

Manufacturer DCRetailer DCStore

1,2 & 3 2 & 3 1,2 & 3

On-shelf / point-of-sale availability

Measure if the product is available when the consumer wants to buy it. We will measure this KPI at the point-of-sale only – as an out-of-stock rate.

% Out of stock # Of items / SKUs not available divided by the number of items / SKUs.

OOS should be measured as frequently and as practically as capabilities allow (e.g. audits-preferably at peak times. Mkt. Measurement data, statistical analysis) 6 items missing versus 100 items expected = 6%

on-shelf or point-of-sale. This KPI should be reported by Manufacturers (based on their knowledge of their brand’s in-stock position) and by retailers.

1 1 1


11 Implementation Measures % of consumer units allocated GTIN% of cases / cartons / inners allocated GTIN% of pallets / unit loads labelled with SSCC% of item exceptions to GTIN allocation guidelines% of shipping or receiving locations that have been allocated a GLN% of orders transacted via EDI or XML and % of Invoices transacted via EDI or XML% of sales with synchronized Master Data between trading partners via standards compliant and GS-1 Certified data pools% of SKUs registered in the GlobalRegistry % of GTIN’ s that are catalogued consistent with Global Product Classification StandardsFor Retailers: % of checkouts that can scan an EAN 13 digit barcodeFor Retailers: % of checkouts that can scan Reduced Space Symbology (RSS)


2. What capabilities do I need to deliver it?

1. What is it I want to deliver ?

Scorecard Concepts and Best

Practices

Key Performance IndicatorsImplementation Measures


3. How developed are those capabilities within my situation?

Progress vs. criteria / benchmarking

Entry – Are you ready to work collaboratively? Do you have the basic Supply Chain Infrastructure in place?

INTERMEDIATE• Majority of Joint scorecards• Time, resource constrained• non-strategic business / relationship• 80/20 approach

FULL• Current tool• Best tool for internal company assessment• used jointly in strategic relationships


Scorecard – Progress

Intermediate(2002)

Full(1999)

Cascade down

Cascade down

Deep dive

Seamless link from Entry through Intermediate to Global

Achieving

Improving

Pioneering

Completing the Family

Entry(2001)

Key Performance Indicators(2001)


3. How developed are those capabilities within my situation?

e.g. link to VICS CPFR sitewww.cpfr.org

4. How do I improve those capabilities?


2002 also saw the introduction of the GCI Compliance Scorecard: A shortcut to 3 sections of the Industry tool to measure quantifiable results of implementation of EAN*UCC Standards and GCI endorsed business Processes,


GCI Compliance ScorecardSection 1: Captures The Qualitative Measures for Standards Implementation – CAPABILITY

Section 2: Captures the Quantitative Measures for KPIs

Section 3:Captures the Quantitative measurement for Standards Implementation

ComplianceScorecard

Key Performance Indicators


Scorecard Usage continues to grow…Value being delivered and recognized

1999 2000 2001 2002 2003 20040

500

1000

1500

2000

2500

3000

3500

KPIsFullIntermediateEntryCompliance


400Compliance

500Entry

125Intermediate

1 200Full

686KPIs

Which Scorecard Should I Use?

Trading Partners- Just Starting to Collaborate- Driving for Alignment- Strategic Relations

Companies- Internal Readiness-Management Committees

Country GS-1 & ECR Efforts- To Drive Standards Implementation- To set work plan priorities


Let’s start off by understanding the WHAT The Quantifiable Key Performance Indicators and Implementation Measures of ECR

ComplianceScorecard



ClickHere


The Scorecard looks like this…..

QualitativeAssessment of

Capabilities(not going to spend much

time here)

QuantitativeAssessment ofResultant Key Performance

Indicators

88

96

95

22

32


QuantitativeAssessment of the

ImplementationGS-1 Standards and Business Processes

97

94

7

89

92

5

50

75

70

8

40


Global Commerce Initiative

Compliance Scorecard2004 Benchmark Results

Winter / SpringCase Studies &

Improvement Plans

Fall Board MeetingReview Results and Progress

July – Sept.Complete Scorecards

Spring Board MeetingReview Improvement Plans &Launch next year cycle


So How Did We Do?PARTICIPATION 2002 2003 2004# of Scorecards 159 183 326 (+78%)

# of Companies 56 60 71 (+18%)

CountriesNAEMEALAAsia

25852525

201102525

45 (+130%)185 (+68%)29 (+16%)67 (+168%)

• Growth of Participation• Was driven by Companies Broadening their geographic representation• To be a better measurement tool, we need to reach out to more companies.


There are 11 Implementation Measures

The first 4 are focused on the use of GTINS, or barcodes at various stages in the supply chain.

And 9 Key Performance Indicators


The Global Trade Item Number is a globally unique number to identify trade items, and is therefore the foundation for Global e-commerce.“Umbrella" term used to describe the entire family of EAN/UCC codes, including EAN/UCC-8, UCC-12 (UPC), EAN/UCC-13, and EAN/UCC/DUN-14.

What is a GTIN ?


Product & Shipment Identification – GTIN at Consumer Unit Level

Use of EAN/UCC 14 digit Global Trade Identification Number (GTIN) at the consumer item level including (1) the ability to store and process 14 digit numbers in your interface with your trading partners, (2) the ability of all point-of-sale systems in your company if you have them to scan EAN*UCC-13, UPC-12 and EAN*UCC-8 barcode symbols and (3) application of automatic data capture (ADC) for bar-coding scanning and/or radio frequency applications (RFID). Simple Weighted

Total 92.4% 92.2%

NA 86.3% 90.4%

EMEA 94.4% 98.3%

LA 100% 100%

Asia 84.2% 76.3%

NothingPlanned

Plans Agreed

PilotsStarted

Roll-outStarted

FullImplementation

European Analysis- GTIN at Consumer Unit Level

# of Records Business Type Cum. $US Value Wtd. Result

90 Manufacturers $58.4Billion 97.9% of Units allocated a GTIN

28 C&C / Retailers / Wholesalers $76.7Billion 98.6% of Units allocated a GTIN

118 All $138.1Billion 98.3% of Units allocated a GTIN

Discussion – Why Not 100%?

Because there are items transacted that do not have barcodes today (flowers, bulk, fresh)

These items require RSS technology


Product & Shipment Identification – GTIN at Trade (Case, Carton) Unit Level

Use of EAN/UCC system (14 digit Global Trade Identification Number (GTIN) at the Trade Unit level (case, carton) and application of automatic data capture (ADC) for bar-coding scanning and/ or radio frequency applications (RFID).

Simple Weighted

Total 86.5% 74.9%

NA 84.7% 69.4%

EMEA 88.3% 91.9%

LA 99.9% 100%

Asia 79.8% 82.3%

NothingPlanned

Plans Agreed

PilotsStarted

Roll-outStarted

FullImplementation

European Analysis- GTIN at Trade Unit Level


89 Manufacturers $57.5Billion 96.4% of Trade Units allocated a GTIN

27 C&C / Retailers / Wholesalers $82.2Billion 88.7% of Trade Units allocated a GTIN

116 All $139.7Billion 91.9% of Trade Units allocated a GTIN

DiscussionThe largest GAP is the lack of GTINs application at the “Inner pack” level.

It appears that the 89 responding manufacturers do a better job than is “averagely” seen by the retailer segment.


Product & Shipment Identification (GTIN) Violations

What % of items sold / received have exceptions to the Global Trade Identification Number (GTIN) allocation guidelines?.

Simple Weighted

Total 2.7% 3.0%

NA 2.4% 3.5%

EMEA 2.0% 1.1%

LA 0.9% 2.9%

Asia 5.1% 3.8%

European Analysis- % of items with Know GTIN Allocation Rules Violations


43 Manufacturers $42.2Billion 1.4% of items have know violations

26 C&C / Retailers / Wholesalers $74.3Billion 1.0% of items have know violations

69 All $116.6Billion 1.1% of items have know violations

Discussion. It appears that far fewer companies are tracking / measuring data quality. (30% less records than most other measures)Those that are measuring know they have errors that need to be fixed.Since “you manage what you measure” and since “data quality” is the root of synchronization benefit – this should be a high priority.


Use of the EAN.UCC GPC (Global Product Classification) standards to classify and categorise products in the areas of forecasting, planning, searching, procurement, category management and global data synchronization in the communication both internally within the organizations and between trading partners..

Product Classification Standards

NA EMEA LA Asia Total0

1

2

3

4

1.71.2 1.0 1.1 1.2

2004

Simple Weighted

Total 17.0% 10.0%

NA 25.6% 9.9%

EMEA 16.8% 10.1%

LA 15.8% 5.0%

Asia 18.8% 11.0%NothingPlanned

Plans Agreed

PilotsStarted

Roll-outStarted

FullImplementation

European Analysis- GTINs catalogued consistently with GPC Standards


96 Manufacturers $65.6Billion 17.6% consistent with GPC Standards

6 C&C / Retailers / Wholesalers $48.6Billion 0.0% consistent with GPC Standards

102 All $114.2Billion 10.1% consistent with GPC Standards

Discussion.Product Classification Standards new in Mid-2004Fast Moving Consumer Goods including Food, Beverage, Tobacco completed first. Manufacturers just starting to implement.Gen. Merchandise, DIY, Hardlines, Apparel to followRetailers need multiple categories available to use the capabilityThis critical mass of categories should be available now.


Global Data Synchronization

The establishment, loading, registering and synchronizing of item and party data based on EAN.UCC standards (GDS Network) Simple Weighted

Total 16.3% 12.2%

NA 16.6% 9.9%

EMEA 18.7% 20.8%

LA 10.6% 4.6%

Asia 8.7% 3.0%

NothingPlanned

Plans Agreed

PilotsStarted

Roll-outStarted

FullImplementation

European Analysis- % Sales Synchronized via Standards Compliant Data PoolNote: in 2005, measure will be adjusted to read “GS-1 Certified Data Pool”


97 Manufacturers $66.7Billion 21.2% of sales synchronized

11 C&C / Retailers / Wholesalers $65.4Billion 20.4% of sales synchronized

108 All $132.1Billion 20.8% of sales synchronized

Discussion.Results are probably overstated relative to new “certified” measure versus simply “standards compliant”GDSN Roadmap / GlobalRegistry now in place. Results should grow.Sinfos, WWRE, Transora, GXS, GS-1UK Data Pool, UCCNet (and 4 other) Data Pools now “Certified”The “work” is to get non-certified data pools “certified” or move to a certified data pool.Only 11 (versus average 28) retailers responded to this measure.


Use of Electronic Message Capability

NA EMEA LA Asia Total0

1

2

3

43.1 2.9

2.4 2.42.8

3.22.8

2.2 2.02.5

3.32.7

2.4 2.32.7

20022004

2003

Use of standard electronic messages to support the product replenishment process between trading partners. These include orders, advanced shipment notices (or despatch advice), receiving advice and invoices. Messages should be transmitted using EDI via EANCOM, web-EDI or XML standard formats.

Simple Weighted Simple Weighted

Total 52.5% 86.9% 44.8% 82.8%

NA 73.0% 94.6% 65.7% 91.2%

EMEA 56.3% 71.7% 51.6% 66.1%

LA 41.5% 39.4% 29.0% 35.8%

Asia 44.2% 48.7% 28.4% 35.1%

% of Orders % of Invoices

NothingPlanned

Plans Agreed

PilotsStarted

Roll-outStarted

FullImplementation

European Analysis- % of Orders & Invoices transacted via EDI or XML# of Records Business Type Cum. $US Value Wtd. Result

10299

Manufacturers $70.7Billion$67.8Billion

62.2% of orders EDI or XML57.6 % of invoices EDI or XML

29 C&C / Retailers / Wholesalers $85.4Billion 79.6% of orders EDI or XML72.9% of invoices EDI or XML

131128

All $156.2Billion$153.2Billion

71.1% of orders EDI or XML66.1% of invoices EDI or XML

Discussion.Electronic Messaging for orders and invoices remains an underutilized capability in Europe.In this case, it appears that the participating retailers make more use of the capability than retailers “averagely” seen by suppliers.


Pam Stegeman

Vice President, Supply Chain and TechnologyGrocery Manufacturers of America


GMA’s Work in Supply Chain

Mission: To assist in creating efficient, effective supply chain

Tools: ECR principles, GS1 Global Standards

Current Focus:

GTINs, GLNs

Global Data Synchronization

Need: Measurement tool


GMA’s Use of GCI Scorecard

GMA and North American Manufacturers have been working on GTIN implementation and GDS for past 5+ yearsHigh level support within companiesStrong desire to track progress

Set North American goals in 2004Too many industry surveys, but nothing tracking standards compliance


GMA’s Progress on GCI Scorecard

North American Company Presidents (IAC) took lead to use existing scorecard to measure progress

Results: 200320

200445 (+130%)

Now, IAC companies are completing scorecards on same cycle as GCI Board


Implementation Measures 2004 Benchmark

Goal Timeframe

% of consumer units allocated GTIN 90.1 95 Jan 2008 Requires RSS

% of cases/cartons/inners allocated a GTIN 69.4 80 Jan 2007 Gap is “inners”

% of pallet/unit loads labeled w/ SSCC 74.0 80 Jan 2007

% of item exceptions to GTIN allocation guidelines 3.5 <1 Jan 2006 All about clean data

% of shipping or receiving locations that have been allocated a GLN

62.8 80 Jan 2007 Move from Duns to GLN

North American Goals, Timelines, and Measures


Implementation Measures 2004 Benchmark

Goal Timeframe

% of orders transacted via EDI or XML 94.6 85 Goal Achieved

% of invoices transacted via EDI or XML 91.2 85 Goal Achieved

% of sales with synchronized master data between trading partners via standards compliant data pools

9.9 50 Jan 2007 20% in 0550% in 06

% of GTINS catalogued consistently w/ Global Classification Standards

9.9 50 Jan 2007

North American Goals, Timelines, and Measures


GMA’s Use of GCI Scorecard

Results used by GMA and other industry groups to determine where more work and education is needed

More education and business case studies on GDSEducation/communication of GTIN Allocation GuidelinesInformation on Global Product ClassificationPush GLNs


2005 Plan to Drive Engagement

Goal:

15%+ increase in number of manufacturers completing scorecard

Plan:

Present updates at each IAC meeting

Present to other GMA Committees and conferences

Use output as GMA Benchmarks on Standards implementation in U.S.


Is ECR dead in the U.S.?

Absolutely NOT!!!U.S. FMCG and Retail industries have similar

work plans to ECR Europe

We may not have a formal ECR venue,

but the work, the attitude, and the collaborative spirit is alive and well


A Quick Look at Key Performance Indicators


Criterion – EUROPE Totals Units

Sample total revenue US$m # Records

2004Sample

Weighted Avg

2003 Simple

Average

2002 Simple Average


Service Level / Unit Fill Rate % 132401 87 95.2 96.9 96.1On-Time Delivery % 128720 80 90.6 88.4 93.4Manufacturer/Supplier's Finished Goods Inventory Cover

days 43605 55 39.2 39.2 42.3

Retail Distribution Centre Inventory Cover days 98083 41 19.1 19.1 15.7

Retail Store Inventory Cover days 68219 35 37.9 14.4 17.0

On-Shelf/Point-of-Sale Out-of-Stocks % 76469 48 5.1 4.0 4.3

Lead Time hours 124601 82 61.7 37.1 48.3

Distribution Costs (% of sales value) % 123743 69 4.0 3.6 4.3Invoice Accuracy - Master Data % 84613 52 94.9 96.4 91.3Invoice Accuracy % 98055 75 86.3 91.7 88.4


Criterion – EUROPE MANUFACTURERSKey Performance Indicators Units

Sample Weighted Avg


Service Level / Unit Fill Rate % 98.5 47005 58

On-Time Delivery % 96.3 43324 51

Manufacturer/Supplier's Finished Goods Inventory Cover days 39.2 43605 55

Retail Distribution Centre Inventory Cover days 22.0 17468 18

Retail Store Inventory Cover days 6.7 7823 7

On-Shelf/Point-of-Sale Out-of-Stocks % 5.9 31751 26

Lead Time hours 60.4 39205 53

Distribution Costs (% of sales value) % 5.1 40856 44

Invoice Accuracy - Master Data % 98.6 29160 27

Invoice Accuracy % 92.6 38083 48

Criterion EUROPE C&C / RETAILERS / WHOLESALERSKey Performance Indicators Units

Sample Weighted Avg


Service Level / Unit Fill Rate % 93.4 85396 29

On-Time Delivery % 87.7 85396 29

Retail Distribution Centre Inventory Cover days 18.5 80615 23

Retail Store Inventory Cover days 41.9 60396 28

On-Shelf/Point-of-Sale Out-of-Stocks % 4.5 44718 22

Lead Time hours 62.4 85396 29

Distribution Costs (% of sales value) % 3.5 82887 25

Invoice Accuracy - Master Data % 92.9 55453 25

Invoice Accuracy % 82.3 59972 27


Key Performance Indicators and Implementation Measures


Implementation Measures 2004Benchmark Goal

Timeframe

% of consumer units allocated GTIN % 92.2 95 Jan 2008 Requires RSS

% of cases/cartons/inners allocated a GTIN % 74.9 95 Jan 2007 Gap is “inners”

% of pallets/unit loads labeled with SSCC % 65.7 80 Jan 2007

% of item exceptions to GTIN allocation guidelines % 3.0 < 1 Jan 2006 This is all about clean data


% 66.0 80 Jan 2007 Requires GLN allocation rules

% of orders transacted via EDI or XML % 86.9 85 Jan 2005

% of invoices transacted via EDI or XML % 82.8 85 Jan 2006


% 12.2 50 Jan 2007From 13 – 26 in 05, 26 – 50 in 06

% of GTINs that are catalogued consistently with Global Product Classification Standards

% 10.0 80 Jan 2007

% of checkouts that can scan a 13 digit barcode % 99.9 99 Jan 2005

% of checkouts that can scan Reduced Space Symbology (RSS)

% 6.3 99 Jan 2008

We now have Benchmark Data to Establish GLOBALGoals, Timelines and Measure Real Progress


Implementation Measures WW 2004

BenchmarkWWGoal

Europe 2004Benchmark Europe goal

% of consumer units allocated GTIN % 92.2 95 (1/08) 98.3

% of cases/cartons/inners allocated a GTIN % 74.9 95 (1/07) 91.3

% of pallets/unit loads labeled with SSCC % 65.7 80(1/07)

39.8

% of item exceptions to GTIN allocation guidelines % 3.0 <1(1/06)

1.1


% 66.0 80(1/07)

82.1

% of orders transacted via EDI or XML % 86.9 85(1/05)

71.7

% of invoices transacted via EDI or XML % 82.8 85(1/06)

66.1


% 12.2 50(1/07)

20.8

% of GTINs that are catalogued consistently with Global Product Classification Standards

% 10.0 80(1.07)

10.1

% of checkouts that can scan a 13 digit barcode % 99.9 99 100.0

% of checkouts that can scan Reduced Space Symbology (RSS) % 6.3 99(1/08)

**

What Goals, Timelines and Measures Will You Set for your Company / Country / Business unit?


1. Performance Gaps can be identified

Criterion UnitsSample

Weighted AvgSample total

revenue US$m # RecordsMy Weighted

Avg My GoalKey Performance Indicators Service Level / Unit Fill Rate % 95.2 132401 87 99.7 On-Time Delivery % 90.6 128720 80 96.4 Manufacturer/Supplier's Finished Goods Inventory Cover days 39.2 43605 55 37.3 Retail Distribution Centre Inventory Cover days 19.1 98083 41 23.2 Retail Store Inventory Cover days 37.9 68219 35 30.0 On-Shelf/Point-of-Sale Out-of-Stocks % 4.1 76469 48 6.2 Lead Time hours 41.8 124601 82 58.8 Distribution Costs (% of sales value) % 4.0 123743 69 5.0 Invoice Accuracy - Master Data % 95.1 83513 51 98.1 Invoice Accuracy % 86.5 98055 75 96.1

The same can be done with the Key Performance Indicators

Key Performance Indicators - Benchmark Results

<4%48

2. Objectives can be set


Rita Marzian

Title: Metro Stores

And now we can use the Global Scorecard to Identify HOW to improve those results


Now That We Know WHAT Performance Measures Need to ImproveWe Need to Understand HOW To Improve Them - The Best Practices

Lets start with a look at the demand side……


Collaborative Shopper Value Creation

POS DATA

Research AgencySupplier 1

supplier 2

Market ResearchCompany

PanelServices

Shopper research

Retailer

Consumer research

Qualitative Data

Capture and share Consumer- and Shopper-Data needed for joint Value creation

1. Collaborative Information Management


Collaborative Shopper Value Creation

2. Shopper Targeting


Collaborative Shopper Value Creation – Differentiated Solutions


Shopper loyalty management

Relationship based solutions

Category / brand management

Integrated value solutions

Collaborative Shopper Value Creation – Differentiated Solutions


Supply Scorecard

Martin White


Supply Management

Reliable operations is an increasingly relevant theme in a fast changing business environment

Focus of expansion


Definitions store operations reflects emphasis to the shelfneed for compliancedrive to improve shopper availabilitydistributionreflects increased use of track and traceproductionreflects practices of synchronisation and lot traceability

Operational Excellence

Concept

it is about continuous improvement strategies and techniquesa focus on minimising service and quality defects e.g.out of stocks

We have enhanced the concept definition and the definition of best practices today


But the main focus is on two best practices (1)Reliable stockloss and shrinkage management


From nothing planned – 0

To fully implemented - 4 Stock loss is tackled as a part of corporate policy, in a proactive manner. Within the

organisation there is a dedicated department for handling stock loss. The problem is measured and analysed on a regular basis. A systematic plan to tackle shrinkage, both individually and collaboratively, is in place, which is acted upon and regularly reviewed. Optimisation of shopper satisfaction achieved through integrating markdown and loss management with product availability

Applicable to known and unknown stocklossReflects practices from the ecr shrinkage group

Stock loss is not measured and there is limited awareness of the problem. There are no plans to alter stock loss measurement processes, to share information or to take individual or joint proactive measures to reduce stock loss


(2)Reliable on–shelf availability management


From nothing planned - 0

To fully implemented - 4

Reflects the need to balance availability with a cost to serve and the customer reactionBest practice is a continuous real time process, fully linked to consumer value creation – but is independent of the technologies required to do this

Out-of-stock rate not known. Trading partners have no plans to tackle on-shelf availability, because it is not seen as an issue

OSA is an integrated business process. Continuous measurement with automatic and alert based data capture, regular root cause analysis and continuous actions based on consumer value creation strategies is undertaken


Enabler Changes

Chris Cave JonesIBM


Enabler Changes


Use of product classification standardsThe EAN.UCC Global Product Classification (GPC) standards allow products to be grouped into a standard hierarchy.

The business objectives of the standard are:

To support buying programmes by allowing buyers to pre-select groups of applicable products.

To provide a common language for category analysis, thus speeding up the ability to react to consumer needs.

To be a key enabler of the data synchronisation process


Electronic messages for supply

Manufacturer Retailer

OrderInvoice

Receipt AdviceAdvanced Shipment NoticeOr

Despatch note


Electronic messages for CPFR

Manufacturer Retailer

Sales HistoryInventory

Forecast


Electronic messages for data synchronisation

GTINs plus all mandatory attributes

GLNs plus all mandatory attributes

Messages exchanged between users and datapools, between data pools, with the single item registry, between trading partners


DataPool

Manufacturer

Registry

1. A manufacturer will publish item information to the source data pool.

2. The data pool sends very basic information about the item to the Global Registry.

3. The registry holds this basic information about all items and the location of each items’ source data pool.

DataPool

Retailer

4. A retailer will search the registry, via a selected data pool, for an item (by GTIN or by description). The registry returns the details of the items to the data pool.

5. The trading partners synchronise the item information between their respective data pools.

Global Data Synchronisation

This model supports a rich network of data pools.


Electronic Product Code


How the EPC network automates the supply chain


Web site demonstration

Chris Cave JonesAssociate PartnerIBM Business Consulting Services


Select your language

Site fully translated

Full site translation in progress

Some elements translated

Getting Started


Introductory material on

• ECR• Key Performance Indicators• The different levels of scorecard• How to use the scorecard collaboratively with a trading partner• How to do benchmarking• How to customise your scorecards and KPIs


Click on the name any of the improvement concepts to find out more about it.

Guide to ECR Improvement Concepts


Scroll Down


Additional resources section with links to related sites or other downloadable material


Data synchronisation movie


Use Key Performance Indicators

“the What”


Insert new KPI record


First enter your profile data so your KPIs can be correctly registered

Enter your annual revenue so that the weighted average can be calculated

New feature to allow data to be entered for a single country or a region


Next enter your KPI values

Click on the KPI name if you want to see the definition

Scroll Down


Here is where you enter your Implementation Measures

Optional KPIs for those who want a wider range of benchmarking measures

Scroll Down


Click the “Save” button once you have finished entering your data


KPIs must be submitted for error

checking before they can be benchmarked


Next, we’ll use the capability scorecards


First, we’ll demonstrate the full

global scorecard


You have to enter a scorecard before

you can do benchmarking!


Enter your profile data, then click

“Submit”


Enter your capability scores by clicking on

the radio button

…or click on the concept name to see the scorecard details


Enter your capability scores by clicking on

the radio button

Enter comments or justification for the

score here


The GCI data entry short cut combines

the Enablers section of the full scorecard with the KPIs and

the Implementation Measures


Scroll Down


Enter KPI values

here then scroll down


Enter Implementation Measures, then when ready click

“Submit”


I will now demonstrate how to

benchmark KPIs

I signed on to the KPI section using

the P&G master user name


The P&G Master User can see all the KPI records submitted

by each of his subsidiary users as well as his own KPI

records.

He can select which records he wants to include in the

benchmarking report


I selected to benchmark against European KPI values

For manufacturers

And to display the results in a table


I could have chosen to display the results in a set of

distribution charts

Similar charts can be produced for ECR Capability

scores


I will now demonstrate how to use the Entry Level Scorecard Collaboratively with a trading

partner


Enter a new joint scorecard


You have to know the master user name of your trading

partner. Ask them if you don’t know


Enter your profile data and then select who you want to work with

at your trading partner


At the bottom, I enter my proposed actions

I then click “Save” to save it as a draft. My trading partner can’t see the scorecard at this stage


After saving, I am returned to the view screen and can submit the scorecard to my trading partner

when ready.

My trading partner will get an automatic e-mail telling him that a scorecard has been submitted for

his attention


My trading partner signs on, and then finds my scorecard in his

“Available Scorecards” list.He clicks the “View” icon to see

it.


He reviews my scores and comments

He can either choose to accept them as is, or can edit them


At the bottom of the “Edit” screen the trading partner can enter his

own comments

End then clicks “Save”


Status changes to “Edited By Partner”


I can review the trading partner’s comments and the approve the

scorecard or edit again.


Status changed to Joint Confirmed


Now we will demonstrate using the intermediate scorecard with a trading partner


The trading partner is selected, profile set up then scores and comments entered using the

Intermediate Level Scorecard


Submit to trading partner when ready


My trading partner can see that I have created a scorecard, but cannot view it until I have submitted it.

In the meantime he can start his own scorecard, by click in the “Respond” button. His scorecard will be linked to mine


He completes his Intermediate Scorecard and then clicks “Save”


Once both parties have submitted their scorecards, we are ready for the workshop.

Once both parties are in the same room, we can start the workshop.


My score, comments and actions are shown here

My trading partner’s score, comments and actions are shown here

Our jointly agreed score, comments and actions are entered during the workshop


The Sainsbury Master User can monitor the state of all of the Intermediate Scorecards

whether under progress or completed


Intermediate Scorecarding in Action


The last area is for the deeper KPI benchmarking systems


The Glosup programme allows retailers to carry out deeper benchmarking analysis

Click here to apply to Templeton College, Oxford University, for membership of the programme

A full set of downloads is available on the siteAPQC is an organisation which supports standardised in-depth benchmarking of

business measures.


www.globalscorecard.net


Case Studies

1. How ECR South Africa Used the Global Scorecard to Galvanize Action

2. How Metro is using the Global scorecard

3. P&G’s use of the Full Scorecard as a collaboration tool

South Africa – Scorecard in action

August IwańskiChief Executive - CGCSA

1st October 2002

Mission

To enable retailers, wholesalers, manufacturers, logistics and service providers in the South African Consumer Packaged Goods industry to WORK TOGETHER to meet consumer needs better, faster, and at least cost.

Vision

“A single voice, adding value”

Co-Chairs:

Directors:

Board

Key activities

Supply and Demand Chain efficiencies – under the banner of ECR

Crime Prevention Programme Global Standards including data

synchronisation and catalogue (PDC.za) Legal and Regulatory (non-competitive

issues including Food Safety)

Objectives

Best practice processes To develop and promote best practice processes for joint

demand and supply management projects. EAN●UCC standards endorsed by GCI

To support and disseminate the adoption of identification and communication standards i.e. the Enablers and Integrators (as agreed through EAN●UCC and endorsed by the GCI) which enhance inter-company logistics and increase efficiencies for trading partners.

Objectives (cont. 1)

Industry research and education To improve market understanding of member

companies through industry research and education.

A voice for the industry To provide a voice for the industry to government

and other key bodies on all relevant industry, legal & regulatory affairs.

Underlying principles

Focus on the consumerA commitment to the belief that sustained business success stems only from providing consumers with products and services that consistently meet or surpass their demands and expectations.

Working Together The greatest consumer value can be offered only when organisations work together, both internally and with their trading partners, to overcome barriers that erode efficiency and effectiveness.

South African FMCG Value Chain Analysis (VCA)

First study commissioned in 1999 To determine the potential cost savings in the SA FMCG

Industry 11 Manufacturers and 6 Wholesale / Retail participants Key Results

• Manufacturers were ahead of retailers• R2.55 billion potential saving for consumers• R5.1 billion potential saving in a once off inventory reduction

South African FMCG Value Chain Analysis (VCA) cont. 1

In 2004 a new study was commissioned To measure progress of ECR implementation in

the SA FMCG Industry To Identify opportunities for further improvement 22 Manufacturers & 6 Retailers/Wholesalers

VCA Project - Purpose

Snapshot - Determine the degree of implementation, Trend - Identify whether there has been progress

since the 1999 study Industry - Identify opportunities for industry initiatives

to implement improvements Benchmark - Allow participating organizations to

benchmark themselves against the SA FMCG industry, as well as run global benchmarks

Action - Help participants identify opportunities and improvement potentials and specific action steps

Trigger - Deliver a trigger for the SA industry to start talking TO rather than AT one another

Working together22 Manufacturers, 6 Retailers

National Brands

Sample Composition22 Manufacturers, 6 Retailers/Wholesalers

Participant Composition

NB: Some participants have filled in more than one scorecard, as they scored for several categories.

Survey Findings – Key Performance Indicators

The Supply Chain is neither lean nor efficient 17 days more inventory in the SA Supply Chain

than the global Averages Case fill / service level is inadequate:

• Averages On time delivery: Manufacturers 90.2% vs. retailers 87.3%, which means that 10-12% of deliveries are late

Unnecessary frictions in order cycle & sorting out problems

Survey Findings – Key Performance Indicators (cont. 1)

Retailer DCs seem to not yet have yielded the expected benefits Similar store inventory levels for DSD and DC replenished operations

Supply Chain as a whole is not very responsive Long lead times / replenishment cycles, NDDs Average level out-of-stock on shelf is between 9 and 10%

Supply Chain operates in a traditional push approach Despite pledges towards collaboration current business practices

between retailers and manufacturers remain predominantly “push” and deal driven

Performance measuring is not standardized or a regular practice The South African FMCG industry needs to operationally a standard

set of performance measures which is continuously monitored, reviewed and acted upon

KPIs - Averages

1999 – 2004 – 2007 (total ECR)

1999 2004 20070%

10%

20%

30%

40%

50%

60%

70%

80%

ManufacturersRetailers

(target)

1999 – 2004 – 2007 (total ECR) cont. 1

Since 1999 survey – ECR-SA implementation shows moderate progress.

Retailers embracing ECR principles slightly more than manufacturers, both parties are virtually on par on overall ECR score.

Participants have indicated that over the next three years they want to get from a piloting stage to the point where the roll out of ECR principles is starting to yield real benefits to the business.

2005 Action Steps

CGCSA Board agreed to focus on 4 projects identified from the VCA Analysis:1. On Shelf Availability2. Standardized Industry Key Performance

Indicators3. Category Management Methodologies4. Training and Skills Development

Lessons Learned

Understanding of the principles depicted on the scorecard is critical

CEO Commitment essential Cross-functional team - directors and senior

management attendance at the workshop is essential

Choose the right partner/facilitator Adequate time is given for the completion of KPI’s Three workshops per company must be held

Lessons Learned (cont. 1)

Enough time must be allocated after the workshops to re-visit participating companies to review data before presenting

Do not compare against your local competitor – benchmark against global

Less is more Regular feedback Conduct the survey at least every 4-5 years to

monitor progress and keep top of mind

Finally, to conclude

Just do it!

The end

Thank you


Global Scorecard at the METRO Group

Rita MarzianMETRO Group


What it started with

We have been doing ECR since the early 90‘s

We have seen many successful projects

Each project has it‘s individual KPI‘s

Numerous projects have become daily processes

However….


What we did not really know:

How are we doing in our distribution lines?How are we doing in our countries?Do we really do as good as we think we do?Where do we stand compared to the rest of the industry?

Where can we still improve?What areas do we need to address first?


Where can we find the answers?


That is what we did

Identify ‘Scorecard Ambassadors‘ in the various distribution lines

Train people on using the Global Scorecard

Evaluate process maturity for demand, supply and integrators

Collect KPI‘s and Implementation Measures

Fill in the Full Global Scorecard for Germany

Fill in the Compliance Scorecard for all our countries


First Results

Group wide we were equal to or above the average in most of the areas

There are areas where we can do much better:

Strengths and weaknesses differ by distribution line and country

We need to push the application of enablers with our business partners!!!


Current Status

Roll-Out of compliance scorecard under way to all our countries across all distribution lines

Setting targets for implementation

Develop plans to implement the missing pieces / drive implementation further


Retailer Scorecard Use

The Sainsbury’s Journey

Time Permitting


Sainsbury’s have been using the scorecard over many years

Full global 20 suppliers

Intermediate 200 suppliers

Entry 2000 suppliers

The process has been integral to delivering sustained collaborative improvements

Entry


Over the years many lessons have been learnt

Senior level guidance, but user driven

Focus on process and getting people going, not the quality of the scores and output

Overcome the fear factor

The benefit from each scorecard is different

Each relationship is unique


Over the years many lessons have been learnt

The process works, but individuals will adapt the process in a way that works for them

Set targets, then manage, monitor and appraise

Creating “champions” encouraged healthy competition and enthusiasm


Improvements came in many different areas

In 2003 for example we reported on:- produce supplier

- depot service level improvement 1.8%

- stock loss reduction 22%- pack at source saving 1.5m euros

- wine supplier-50% reduction in supply chain inventory

-10% improvement in forecast accuracy


Collaboration journey

PDS

Scorecard

ARM

CPS

CPM Collaboration Performance Review

Facilitation of performance reviewsBenchmark DataScorecard Report

Management of Process

Process Configuration & Business Rules

Alerting & Exceptions User Defined Alerts & Exceptions

Data Publishing Reporting of KPI’s

GCI Entry Scorecard Collaborative Business Evaluation

With some suppliers this was a journey over many years


ConclusionsOver the course of the journey the Sainsbury’s team undertook:

Over 1000 scorecardsOver 2500 agreed, joint, actions

The real power lies in local benchmarking and the development of improvement plans with your trading partnerThere is no excuse for not getting started


Procter & Gamble Case Study

Jim FlanneryProcter & Gamble

Time permitting


A Practical Example of using the scorecard to get started

Customer “A” / P&G

Can we find Common Ground to drive Better Business Planning and Long Term Results?

Using the tool to improve Business Results


AssessmentStrengths &Weakness

Opportunities(FindingCommon Ground)

These goals included• Category Share

targets

• Inventory targets

• Cycle Time

• Data synchronization

So we got started..



AssessmentStrengths &Weakness

Opportunities(FindingCommon Ground)

Prioritize

Joint Action Plans

• Execute the Plans

• Review Results

So we got started..


Review Results

Customer’s Market Share objectives exceededCategory Management projects running

Shelf technologyPromotional Effectiveness

Weeks inventory reduced (P&G stock on hand reduced by 2 weeks)# of orders reducedclaims reduced from $120,000 to Nil !!Order / delivery cycle time reduced by 3 daysFull Scorecard will be updated annually


Financial Results

Customer / P&G sales up 9% (Ahead of P&G’s market growth & Retailer’s business)

P&G “Cost of business” down 2%

plus profits from added sales

Customer’s “Cost of business” down 3%-3.5%

Plus inventory savings & Cash flow improvement

Bottom line profit improvements for both Customer and P&G


Global Scorecard results vs. Operational Indices

209 318 520 369100

110

120

130

140

150

NOS Volume IndexRetailer's Gross MarginP&G Profits

Year 1

Year 2

Year 3

Year 4


Thank you

www.gci-net.org/gswww.globalscorecard.net

ecr europe forum '05. use the ecr scorecard to benchmark and improve your performance

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