for ecr by:larry gillman wayne east 1)supply chain vision 2)review of key supply enablers 3)supply...
TRANSCRIPT
For ECRFor ECRBy: Larry Gillman Wayne East
1) Supply Chain Vision
2) Review of Key Supply Enablers
3) Supply Chain Processa) Master Data Alignmentb) Efficient Replenishmentc) Physical Product Distributiond) Financial Reconciliation
4) Industry Direction
AgendaAgenda
ECR - Grocery Industry ECR - Grocery Industry UpdateUpdate
The 5 ECR Enablers :
1) Scan Data Integrity2) EDI - Electronic Data Interchange3) Continuous Replenishment4) Activity Based Costing5) Category Management
1) UPC - Common Code2) POS Scanning - 3rd Party Validation3) Case Bar Codes - September 19984) EDI - VICS 4010 by March 1999 to standardize the
industry- future releases to be controlled by the industry
Progress to Date :
• Canadian ECR development slow
• Senior ECR Committee formed
• ECR Sub-Committee support
• Some Canadian breakthroughs
• Canadian industry vision
ECR - Canadian ECR - Canadian DevelopmentDevelopment
• To reduce total Supply Chain inefficiency
and costs by utilizing and supporting
technology enablers on all major
transactions.
Supply Chain VisionSupply Chain Vision
• The overall outcome is the right product, in the right place, at the right time, resulting in:
• Reduced inventory
• Higher customer service levels
• Warehouse, handling,
• Transportation and manufacturing
• Efficiencies
Supply Chain Vision (cont’d)
• The industry must achieve critical mass on key enablers:
– UPC numbers on all products
– Bar codes for rapid identification– package, case, pallet
– Integrated EDI
Industry EnablersIndustry Enablers
• Each company will pursue operational enablers independently, including:
1) Activity Based Costing
2) Category Management
3) Forecasting
4) Continuous Replenishment
ECR Operational EnablersECR Operational Enablers
Supply Chain VisionSupply Chain Vision
Key Supply Chain Processes
• ECR Vision addresses 4 key processes:• 1) Master Data Alignment• 2) Efficient Replenishment• 3) Physical Distribution• 4) Financial Reconciliation
• Totally integrated to form “Closed Loop”
• Priority for implementation as above
• Item, price and promotion databases each sku.• Supplier responsible for maintenance/transmission.• One valid set of data for Supply Chain.
• Benefits• Eliminates costly errors “downstream”.• Success on data alignment required to ensure other benefits.
Supplier Distributor
Price Change
Promotion
Item Maintenance
1. Master Data Alignment
• Timely exchange of information between supplier and retailer
• Huge benefits to Supply Chain when executed with excellence
• Four key replenishment models
2. Efficient Replenishment2. Efficient Replenishment
A. Vendor Managed Replenishment
• Warehouse sales data used by vendor for forecasting / replenishment.
Supplier Distributor
Inventory Activity
PO Acknowledgment
2. Efficient Replenishment2. Efficient Replenishment
• B. Retailer Managed Replenishment
• Retailer provides forecast projection for supplier’s planning.
• Retailer forwards purchase order.
Supplier Distributor
Product Planning Forecasting
Purchase Order
2. Efficient Replenishment2. Efficient Replenishment
C. Collaborative Replenishment
Supplier Distributor
JointForecastPlanning
ProductForecastPlanning
ProductForecastPlanning
Purchase Order
Additional Research Required
2. Efficient Replenishment2. Efficient Replenishment
Supplier RetailStore
Product Authorization
Purchase Order
Distributor
• Product Authorization of approved listings, supports scanning.
• P.O. confirms order detail.
D. DSD - Direct Store Delivered Product
2. Efficient Replenishment2. Efficient Replenishment
Supplier RetailStore
Invoice
Distributor
• Invoice sent to Retail/communicated to Distributor.• Supplier summarizes all invoices, and communicates to
Distributor.
DSDSummary Invoice
2. Efficient Replenishment2. Efficient Replenishment
D. DSD - Direct Store Delivered Product
• Benefits• Eliminates errors, manual effort.
• Additional Notes• DEX - UCS Technology generates in-store invoice and Receipt
Advice.• Major differences between Distributors on DSD processes.
Supplier RetailStore
Product Authorization
Purchase Order
Invoice
DistributorDSD
Summary Invoice
2. Efficient Replenishment2. Efficient Replenishment
D. DSD - Direct Store Delivered Product
• Lower Inventories
• Higher Customer Service Levels/Sales
• Transportation/Receiving Efficiencies
• Warehouse Efficiencies
• Purchasing and Manufacturing
Key Benefits of Efficient Key Benefits of Efficient ReplenishmentReplenishment
3. Efficient Physical 3. Efficient Physical Distribution/ReceivingDistribution/Receiving
• Efficient distribution/receiving aids in product movement.• Involves Carriers with requests for transfer of product.• Carrier responds to load tender.
Supplier DistributorResponse toTender
Load Tender
Response toTender
Load Tender
Carrier
Supplier Distributor
Advance Ship Notice
• Once product is loaded, Supplier confirms details via Advance Ship Notice.
• Carrier also confirms status of load on route.
ShipmentStatus
ShipmentStatus
Carrier
3. Efficient Physical 3. Efficient Physical Distribution/ReceivingDistribution/Receiving
3. Efficient Transportation and Receiving3. Efficient Transportation and ReceivingAdvance Ship Notice/Case Bar Codes/Advance Ship Notice/Case Bar Codes/
Pallet License PlatesPallet License Plates
• Both Case Bar Code and Pallet License Plate technology enable efficient Transportation and Receiving.
• Supplier assigns each pallet a license plate confirming specific sku’s and quantities.
• Advance Ship Notice details each pallet and license plate.
• ASN updates Distributor’s receiving system, ensuring a match.
• Receiving by license plate versus scanning physical count.
• Stock put away by scanning the case bar code.
• Enables inventory, cross-dock, flow-through warehousing.
• Benefits
• Decreased receiving time/costs
• Reduced errors
• Elimination of paperwork/manual effort
• Reduced cycle time
3. Efficient Transportation and Receiving3. Efficient Transportation and ReceivingAdvance Ship Notice/Case Bar Codes/Advance Ship Notice/Case Bar Codes/
Pallet License PlatesPallet License Plates
• All financial activities automated.
• Distributor informs/pays Supplier on actual goods received (less OSD’s).
• Distributor informs Supplier of actual payment, including cheque stub.
• Distributor/Supplier communicates debits.
Supplier Distributor
Receiving Advice
Debit Credit
Payment/Remittance Advice
Financial ReconciliationFinancial Reconciliation
• Benefits
• Mismatches for over, short and damages eliminated, as Distributor pays on what is actually received
• Paperwork/manual effort on deductions eliminated
Financial ReconciliationFinancial Reconciliation (cont’d)(cont’d)
Individual Processes and Transactions are understandable and manageable.
In total
It is more complex and takes resources to plan the path forward and to manage on a day-to-day basis.
EDIEDI
Process Supplier Distributor
Banks
879, 889, 888
855
850
990
Data Entry
Ordering
Shipping
Invoicing
Payment
Price, Promotion,Item Information
AccountsReceivable
Invoicing
ShipmentProcessing
Order Entry
AccountsPayable
InvoiceMatching
ReceiptProcessing
Purchase OrderManagement
Price, Promotion,Item Information
Transportation Transportation
= optional process)(
204
213 214
856
990 204
213214210
861210
810
820
812
Closed Loop EDI
Key EDI Transactions and Processeshave been identified.
The Supporting Supply Chain Enablersare known.
The Question: SO WHAT
EDIEDI
• Unless the industry commits to the direction, then establishes timelines, and incentives for compliance, we will only drift forward without momentum.
ECRECR
• A suggestion for the sequence of events and timelines.
ECRECR
Master DataAlignment
879-889-888
DSD878-850-810-
882-820
RMI830-850
CollaborativeReplenishment
830-850
Payment820-812810-210
Start - 6 Months 6 Months 6 Months6 Months6 Months
ShipmentManagement
856-861
May99
Nov99
June2000
Dec2000
June2001
Dec200
1
VMI852-850
TransportManagement204-990-214-
213-210
EfficientReplenishment
determinealternatives
Suggested Integrated Supply Chain Suggested Integrated Supply Chain Development Sequence with Timeline Development Sequence with Timeline
EstimatesEstimates
• The benefits are different by company/difficult to quantify
• Long-term, large investment
• Long timelines require discipline/commitment
• Year 2000 and business opportunities have priority
• No “Burning Platform” for our industry
• History shows our lack of industry compliance
Supply Chain Vision IssuesSupply Chain Vision Issues
Comments We Have HeardComments We Have Heard
• We know the benefits • Quaker - Sobeys pilot
• Stop talking - start implementing
• The burning platform is competitors that • have pushed ahead and have efficient supply chains
• If we haven’t accomplished this by the year 2002, it won’t matter anyway
ChoicesChoices
If our industry has an acceptable vision
then
The Sr. ECR Executive Committeehas choices to make.
AlternativesAlternatives
1. Full commitment - industry wide with timelines
2. Commit to the direction - without timelines
3. Options by company - to buy in or opt out
4. Other alternatives
Execution Approach What Execution Approach What Will Keep Us Moving ForwardWill Keep Us Moving Forward
1. Establish incentives for execution
2. Disciplines or penalties for lack of execution
3. Publish scorecards on execution excellence - peer pressure
4. Alternatives
The Path ForwardThe Path Forward
ECRLet’s Move Forward
• To benefit our customers
• To benefit our organizations
• To benefit our industry
From Vision to RealityFrom Vision to Reality
Alison Cameron &
Lucy Abbruzzese
• History…performance issue. The industry’s performance in the implementation of key enablers such as EDI has been less than encouraging.
March 1997…Reality check. Move from involvement to commitment.
IssueIssue
• To realize the full benefits would require:
Implementation of full suite of transaction sets for procurement, settlement, and database synchronization
Critical mass
Efficient Consumer ResponseEfficient Consumer Response
Process Supplier Distributor
Banks
879, 889, 888
855
850
990
Data Entry
Ordering
Shipping
Invoicing
Payment
Price, Promotion,Item Information
AccountsReceivable
Invoicing
ShipmentProcessing
Order Entry
AccountsPayable
InvoiceMatching
ReceiptProcessing
Purchase OrderManagement
Price, Promotion,Item Information
ECR - Product Supply ChainClosed Loop E.D.I.
6
Transportation Transportation
= optional process)(
204
213 214
856
990 204
213214210
861210
810
820
812
• Distributor Perspective
• Manufacturer Perspective
BarriersBarriers
…all parties frustrated
DISTRIBUTOR PERSPECTIVEDISTRIBUTOR PERSPECTIVE
SMALL CO’S MEDIUM & LARGE CO’S
ISSUES COMPLEX IMPLEMENTATION COST/BENEFIT QUESTIONED
LACK OF UNDERSTANDING
ISSUES COMPLEX IMPLEMENTATION BENEFITS RECOGNIZED LACK OF SENIOR MANAGEMENT SPONSORSHIP FOCUSING ON RESOURCES AND PRIORITIES
LACK OF UNDERSTANDING -NOT A TECHNOLOGY TURNKEY SOLUTION BUT A BUSINESS PROCESS SOLUTION
SUPPLIER PERSPECTIVESUPPLIER PERSPECTIVE
SMALL & MEDIUM CO’S LARGE CO’S
ISSUES COMPLEX IMPLEMENTATION NOT COST JUSTIFIED
LACK OF UNDERSTANDING
ISSUES COMPLEX IMPLEMENTATION BENEFITS RECOGNIZED LACK OF SENIOR MANAGEMENT SPONSORSHIP FOCUSING ON EDI RESOURCING AND PRIORITIES
LACK OF UNDERSTANDING -NOT A TECHNOLOGY SOLUTION BUT A BUSINESS PROCESS SOLUTION
Industry Average for EDI Industry Average for EDI Transaction Sets March 1997Transaction Sets March 1997
0
10
20
30
40
50
P.O. INVOICE ITEM MTC. PRICES PROMO
%
EDI Transactions
New Commitment From IndustryNew Commitment From Industry
• New Structure for ECR in Canada
• Assimilate Food and Drug User Group
ECR Sub-committeesECR Sub-committees
E C RC ollab ora tive
F orecs tin gC om m ittee
E C RU n exp la in edD ed u c tion sC om m ittee
U n sa leab leA d visory
S u b -C om m ittee
E C RU n sa leab le
P rod u c tsC om m ittee
E C RE d u cation &
C om m u n ica tion sC om m ittee
E C RS corecard &
B en ch m ark in gC om m ittee
S tan d ard s(G rou p 1 )
S m all C om p an yS o lu tion s(G rou p 2 )
C os t B en e fitA n a lys is
(G rou p 3 )
E D IS u b -C om m ittee
B arcod e /S can d a ta
S u b -C om m ittee
F u rtu reTech & Tren d sS u b -C om m ittee
E d u cation &C om m u n ica tion sS u b -C om m ittee
E C RTech n o log y(E xecu tive )C om m ittee
E C RD S D
C om m ittee
E C RC aseS iz in g
C om m ittee
E C R S teerin g C om m ittee
Mandated to address EDI Issues
• Standards Resolution:
Move to common standard
Move to common version
Efficient Consumer ResponseEfficient Consumer Response
Resolutions:
Determine as an industry the feasibility of moving to a common standard and version.
VICS 4010
Within the 4010 Standard you must make choices regarding the sub-sets of the standards you will use.
UCS - traditional grocery standards- currently used by most of the grocery companies
VICS - traditional general merchandise standard- Hudson Bay, Sears, Wal -Mart utilize
X12 - used by companies that have special requirements- Shopper’s, Canadian Tire
UCS - limited transaction set- for example, transportation transactions are not supported
VICS - very highly used in North America- Release 4010 has grocery requirements added- each’s, inner packs, variable weight, etc.
X12 - individual company oriented- not a recognized industry standard
PositionAdopt the 4010 VICS Standard.Change the use of: Purchase Orders from 875 to VICS Standard 850
Invoices from 880 to VICS Standard 810
• Strategy For Common Standard
Ensure that VICS met all business requirements of traditional UCSDevelop common Canadian implementation guide based upon VICS 4010Develop web based “knowledge network”Develop small company solutions program
Efficient Consumer ResponseEfficient Consumer Response
For future Releases after 4010 the food and drug industry agreed to evaluate the Release as an industry and make a common decision regarding it’s adoption.
Strategy For Common Version
All purchase order and invoice transactions in the food and drug industry must be executed via EDI no later than May 31, 1999.
Note: There are organizations that have strategically moved to an evaluated receipt program. In this case the timeframe for invoices will not apply.
Efficient Consumer ResponseEfficient Consumer Response
• Communications
Series of seminars to educate industry
Implementing 4010: Moving Towards the Year 2000
June 2,1998 Toronto; June 14, Calgary; June 18, Montreal and June 24, Halifax
Efficient Consumer ResponseEfficient Consumer Response
• Created web based knowledge network with ECR information, committee minutes, structure
Efficient Consumer ResponseEfficient Consumer Response
Senior Manager, Graphics and ComplianceSenior Manager, Graphics and Compliance
The Quaker Oats Company of CanadaThe Quaker Oats Company of Canada
Tom McAllisterTom McAllister
7 12345 12345 9
( 01) 90614141000418 ( 15) 991230
( 00) 0 0413245 123456789 4
Universal Universal Product CodeProduct Code
Shipping Container Shipping Container Code 14 in Code 14 in Interleaved 2 of 5Interleaved 2 of 5
Shipping Container Shipping Container Code 14 in Code 14 in UCC/EAN-128UCC/EAN-128
Serialized Shipping Serialized Shipping Container CodeContainer Code18 in UCC/EAN-12818 in UCC/EAN-128
ECR Barcode SuccessesECR Barcode Successes
• 50% rise in first Pass Scan Rate resulting in 50% rise in first Pass Scan Rate resulting in tens of millions of dollars of savings.tens of millions of dollars of savings.
UPC POS First Pass Scan Rates 1995-1998
0%
20%
40%
60%
80%
100%
1995 1996 1997 1998
Year
FP
SR
% FPSR
99% TargetRate
SCC-14 Implementation in the Grocery Industry
0%10%20%30%40%50%60%70%80%90%
100%
1995 1996 1997 1998
Year
%
• Defined deadline and implementation Defined deadline and implementation momentum of SCC-14 movingmomentum of SCC-14 moving toward critical mass.toward critical mass.
ECR Barcode SuccessesECR Barcode Successes
• Simplifying Case IdentificationSimplifying Case Identification
• Better Inventory ControlBetter Inventory Control
• Significant Error ReductionSignificant Error Reduction
• Speeds up Receiving ProcessSpeeds up Receiving Process
• Simplifies Database ManagementSimplifies Database Management
Benefits of SCC-14Benefits of SCC-14
SCC-14 and the Food and SCC-14 and the Food and Drug Implementation Guide Drug Implementation Guide
40104010
•Canadian ECR recommends the use of the Canadian ECR recommends the use of the EDI qualifier “UK” for all new product EDI qualifier “UK” for all new product identification application.identification application.
–Provides link between the UCC/EAN global Provides link between the UCC/EAN global numbering formats (U.P.C., EAN & SCC-14) andnumbering formats (U.P.C., EAN & SCC-14) and EDI.EDI.
–Permits transfer of the SCC-14 information via Permits transfer of the SCC-14 information via EDI transaction sets. (e.g. 856 ASN, 810 Invoice, EDI transaction sets. (e.g. 856 ASN, 810 Invoice, 850 PO etc.)850 PO etc.)