james tupper, ecr learning & change manager, igd · © igd 2012 james tupper, ecr learning...

© IGD 2012

James Tupper, ECR Learning & Change Manager, IGD

13.30 – 14:55 Secondary Hall, ECR Baltic Forum (Vilnius), 8th November 2012

© IGD 2012

Who is attending the workshop?

Trading Partners

Sup

plier

e.g. Pack

Man

ufactu

rer

Distrib

uto

r

Wh

olesaler

Retailer

Co

lleagues

Brand / Marketing

Category / Buying

Supply Chain

Production

Customer Service

Corp Responsibility

© IGD 2012

How to Improve Performance Together?

As a result of this workshop – which builds upon the earlier presentation – you will :

• Gauge the extent to which preventing material waste from occurring in the first place should be more firmly on your agenda

• Use the evidence provided to engage colleagues and trade partners to improve end-to-end waste performance

• Identify actions to truly engage others, embed waste elimination disciplines into day-to-day operations and sustain low waste

• Adapt the methods proven elsewhere and apply them in the Baltic States

13.30 – 14:55 Secondary Hall, ECR Baltic Forum (Vilnius), 8th November 2012

© IGD 2012

Agenda

• Preventing it together rather than just managing it ourselves – Internal – amongst colleagues

– External – with trading partners

• Types of Supply Chain Waste and their root causes

• How to – see what material is wasted, where and when

– identifying how and why wastage is occurring

– generate ideas and design trials to test impacts

• Redistribution

© IGD 2012

Great individual initiatives

We can achieve more!

Connecting the UK Business

UK Business Units

UK Factories

UK Supply Chain

Head Office Financial Tracking

Portfolio Management

Corporate Reporting

© IGD 2012

Deploying “5 to drive”

Consolidated approach

Connecting the UK Business

UK Business Units

UK Factories

UK Supply Chain

Head Office Financial Tracking

Portfolio Management

Corporate Reporting

© IGD 2012

Marketing Finance Operations Sales

X X

Supply Chain

Changes to the Waste Structure

© IGD 2012

Senior Management

Sales & Marketing

Operations

Finance

Lifecycle Team

Changes to the Waste Structure

© IGD 2012

Waste Governance

Objective: Effectively manage business operations to prevent the generation of product and packaging waste in the supply chain

Inputs

• Outputs from previous review

• Latest KPI performance

• Activity status

• External updates (legislative, environmental, supply chain)

• Key topics for this review

Purpose/agenda

1.Performance review

KPI performance

Key changes

Gaps v’s target – action planning

2.Waste Prevention Activities

Latest status

New activities for agreement

Review of implemented activities

3.Risks & Opportunities

Any escalation points?

4.Decisions, actions & outputs

Outputs

• KPI scorecard v’s targets

• Agreed action plan to drive improvement

• Opportunities/issues/risks to be investigated

• Issues/outputs/decisions made

• Escalation points to management forums

`

Attendees

Management Team sponsor - Chair

Waste /Sustainability Manager - Lead

Finance

Functional Waste representatives

Timing

Once per business cycle

KPI‘s

Total waste generated v’s target (total, by product group, by supply chain)

Waste generated / tonne sold v’s target (total, by product group, by supply chain)

© IGD 2012

Need to work cross functionally

Category, Brand and Marketing

Range, product and packaging decisions

Operations Monitoring and communication of material efficiency Processes improvement

Commercial Prioritisation of improvement opportunities Tracking of waste performance across products and trade partners

Sustainability Help others to align decisions based on factual wastage data alongside sales, customer satisfaction and cost information

Function Major Influences Include

Supply Chain Forecasting of and responsiveness to demand Management of product flow and stock life

© IGD 2012

Agenda







• Redistribution

© IGD 2012

Preventing waste with trading partners

• To help trading partners, the group launched

a free Collaborative Waste Prevention toolkit:

• Assist in launching successful collaborative

initiatives

• Providing clear principles

• Giving structure through step-by-step

process to deliver greatest benefits

© IGD 2012

Working together to root out supply chain waste

© IGD 2012

Agenda







• Redistribution

© IGD 2012

A few examples

© IGD 2012

Food & Packaging

Waste

Measurement Machine/Equipment People

Methods Environment Materials

Availability Targets

Forecasting error

Refrigeration

equipment

Promotions

Weather

Shelf-life

Information sharing Packaging

Freshness

Storage

Inventory management

Customer

preferences

Lead times

Forecasting

Transport

Training

Handling

Seasonality

Quality control

Supply chain design

Planning

Different

goals

Source Major events

Production efficiencies

© IGD 2012

Food Supply Chain Waste Root Causes

Defra report: Evidence on the role of supplier – retailer trading relations and practice in waste generation in the food chain

1. Food and Packaging

waste is created between

suppliers and retailers

23. Demand for

certain products has

high variability

25. Promotions create

uncertainty in demand for

promoted product and for other

products (cannibalisation)

21. Forecast are

often inaccurate

26. Weather

fluctuations create

variability of demand

for many products

73. Performance indicators

focus on cost, efficiency

and availability

27. Seasonality and

cyclicality can create

unstable in demand

61. Failure of

refrigeration

equipment (retail

display, transport

and warehousing)

can spoil product

80. Imported products

tend to have longer

lead times

90. Product

recalls create

waste

120. Product gets

damaged or spoilt along

the supply chain

13. Packaging is

sometimes fragile

12. Product is not

always handled

appropriately

30. A structured

approach to running

promotions is not

always followed

110. Packaging

waste arises

along the chain

62. Product

can be

damaged

from chilling

42. People are

increasingly

demanding fresh food

without preservatives

3. Products with poor

appearance often remain

unsold - wasted

60. Poor retailer

chilled displays can

affect appearance

and reduce shelf-life

15. Stacking and

shelving procedures are

not always followed

46. Product rejected by

mainstream retailers can

sometimes be wasted (e.g.

own brand)

20. Over-ordering

and over-

production can

take place

41. Fresh products

tend to have short

shelf-lives 50. Availability

takes priority over

waste

44. Mainstream

retailers demand the

majority of the shelf shelf-

life (60-75%)

45. Short shelf-life

products have been

increasing

32. Retailers and

manufactures don’t

have confidence on

each others’ data

130. Waste may not be

managed systematically

across the supply chain

33. Product stock

can often exceed

demand 70. Products with

shorter shelf-life

left can remain

unsold

82. A higher proportion

of the shelf-life is used

in the supply chain

83. People are

demanding more

products out of season

71. Consumers want

product to be as fresh

as possible

72. Stock rotation

practices are not

always followed81. Out of season

products have to be

imported

63. Poor practices in

cold chain management

can affect the product

91. Failures in Quality

management and

Health & Safety will

cause product recalls

111. Changes in

pricing and labelling

can cause packaging

waste at the

producer

112.

Intermediate

packaging can

create waste

15. Packaging is not

always designed to

minimize waste

Root Cause Analysis – Food Waste

Version 5.0 10/07/09

Prepared by C. Mena

35. Retailers enforce

penalties for not

delivering OTIF

16. Temporally labour is

often not sufficiently trained

47. Own brand

products cannot be

sold to alternative

customers

36. Forecast and orders

can be inflated for

various reasons (e.g.

meet financial targets,

make shelves look full)

37. Forecasting

practices in the

industry are variable

121. Customers

expect consistency in

product appearance

122. Retailers will

reject products

with sub-standard

appearance

2. Products exceeding

their shelf life will be

wasted

100. Responsibility

for managing waste

is not clear in many

organisations

132. Waste is

not measured

consistently

31. Sharing of demand

information between

retailers and suppliers

can be limited

300. Handling

discounts are

offered to increase

efficiency

301. Price sensitive

information cannot

be shared

302. Some

organisations are not

always open to

sharing information

© IGD 2012

Best Practice Sub-Group Survey Q1

© IGD 2012

Identifying instances of out- of-stocks & diagnosing root causes

Source: ECR UK Availability Survey, Convenience with Root Cause Analysis, 2006

Is the product on shelf? No Yes

Root Cause 1: De-listed by store staff

Is the product ranged? No Yes

? Is there a Shelf Edge Label? No Yes

Root Cause 4: Phantom stock

Is stock fit for sale? No Yes

Is there stock at back of store? No Yes

Root Cause 3: In-store damages or out-of-date stock

Root Cause 2: Replenishment discipline

Root Cause 5: Spike in demand

Root Cause 6: Error in order placement

Root Cause 7: Delivery issues (miss-picks, transit damages)

Root Cause 8: Unable to discuss with staff in-store

Ask Store Staff for reasons for shortage

Do systems say there should be stock in-store?

No Yes

© IGD 2012

Agenda







• Redistribution

© IGD 2012

SET UP MEASURE &

UNDERSTAND REDESIGN

& PILOT ROLL OUT

& SUSTAIN

• See what material is wasted, where and when

• See how and why material waste is occurring

• Generate ideas / solutions to prevent waste occurring in the first or redistribute it via alternative markets

Waste Performance Improvement

© IGD 2012

See what is wasted, where and when

• Retailer-supplier team focus on one of their product families where the opportunity to prevent supply chain waste is likely to be most substantial

• Select product family by sharing and combining top level aggregate data about the absolute and percentage values and volumes of material waste between factory in-gate and till

• Material waste can arise at many stages of the supply chain; from goods-in, through processing, packing, storage, picking, dispatch, transport, to shelf replenishment and shopping

• This material waste can take the form of raw material processing loses, clean down waste, and contaminated, damaged, obsolete or expired stocks of product and packaging materials, work-in-progress and finished goods

© IGD 2012


• Interrogate SKU / location / time specific data on ERP or similar systems to identify instances of material waste

• Waste type and reason codes are often entered into these systems to explain waste when a manual adjustment is made – Warehouse codes may include: “promotion”, “minimum order

quantity”, “sales below forecast”, “season exit stock” or “damaged”

• Bring together granular data about the absolute and percentage values and volumes of material waste

• Use the ECR Collaborative Waste Prevention Toolkit and Waste Matrix Wastage Matrix by Product Area

Time Period

of Measure

(Daily,

Weekly,

Periodically)

Value Volume

Product AreaSell Value

(£)Damages Out of Date

Wastage %

to £ Sales

Wastage %

to Total £

Sales

Sell Volume Damages Out of DateWastage %

to Sales (vol)

Wastage %

to Total

Sales (vol)

Example A £425,000 £390 £1,220 0.38 % 0.22 % 3,602 3 10 0.38 % 0.02 %

Example B £82,000 £125 £2,225 2.87 % 0.32 % 9,111 14 247 2.87 % 0.45 %

Example C £225,000 £1,110 £1,375 1.10 % 0.34 % 45,000 222 275 1.10 % 0.86 %

Product Area 4 #DIV/0! 0.00 % #DIV/0! 0.00 %







Totals £732,000 £1,625 £4,820 0.88 % 57,713 239 533 1.34 %

Wastage Matrix for (Product Area )

Time Period

of Measure

(Daily,

Weekly,

Periodically)

Value Volume

SKUSell Value


Wastage %

to £ Sales

Wastage %

to Total £

Sales


to Sales (vol)

Wastage %

to Total

Sales (vol)

Example A £100,000 £32 £287 0.32 % 0.12 % 8,333 3 24 0.32 % 0.10 %

Example B £50,000 £1 £4,754 9.51 % 1.76 % 12,500 0 1,189 9.51 % 4.32 %

Example C £120,000 £2,400 £850 2.71 % 1.20 % 6,667 133 47 2.71 % 0.66 %

Product 4 #DIV/0! 0.00 % #DIV/0! 0.00 %

Product 5 #DIV/0! 0.00 % #DIV/0! 0.00 %

Product 6 #DIV/0! 0.00 % #DIV/0! 0.00 %

Product 7 #DIV/0! 0.00 % #DIV/0! 0.00 %

Product 8 #DIV/0! 0.00 % #DIV/0! 0.00 %

Product 9 #DIV/0! 0.00 % #DIV/0! 0.00 %

Product 10 #DIV/0! 0.00 % #DIV/0! 0.00 %

Totals £270,000 £2,433 £5,891 3.08 % 27,500 136 1,260 5.08 %

Wastage Matrix by Location

Time Period

of Measure

(Daily,

Weekly,

Preiodically)

Value Volume

LocationSell Value


Wastage %

to £ Sales

Wastage %

to Total £

Sales


to Sales (vol)

Wastage %

to Total

Sales (vol)

Example A £500,000 £850 £1,250 0.42 % 0.09 % 41,667 71 104 0.42 % 0.09 %

Example B £750,000 £525 £1,700 0.30 % 0.10 % 62,500 44 142 0.30 % 0.10 %

Example C £1,000,000 £650 £1,450 0.21 % 0.09 % 83,333 54 121 0.21 % 0.09 %

Location 4 #DIV/0! 0.00 % #DIV/0! 0.00 %

Location 5 #DIV/0! 0.00 % #DIV/0! 0.00 %

Location 6 #DIV/0! 0.00 % #DIV/0! 0.00 %

Location 7 #DIV/0! 0.00 % #DIV/0! 0.00 %

Location 8 #DIV/0! 0.00 % #DIV/0! 0.00 %

Location 9 #DIV/0! 0.00 % #DIV/0! 0.00 %

Location 10 #DIV/0! 0.00 % #DIV/0! 0.00 %

Totals £2,250,000 £2,025 £4,400 0.29 % 187,500 169 367 0.29 %

Wastage Matrix by Time Period

Value Volume

Time PeriodSell Value


Wastage %

to £ Sales

Wastage %

to Total £

Sales


to Sales (vol)

Wastage %

to Total

Sales (vol)

Week/Period 1 £2,000,000 £100 £30,000 1.51 % 0.14 % 166,667 8 2,500 1.51 % 0.14 %

Week/Period 2 £1,700,000 £80 £16,150 0.95 % 0.08 % 141,667 7 1,346 0.95 % 0.08 %

Week/Period 3 £1,650,000 £75 £15,675 0.95 % 0.08 % 137,500 6 1,306 0.95 % 0.08 %

Week/Period 4 £1,625,000 £70 £15,450 0.96 % 0.07 % 135,417 6 1,288 0.96 % 0.07 %

Week/Period 5 £1,850,000 £85 £17,575 0.95 % 0.08 % 154,167 7 1,465 0.95 % 0.08 %

Week/Period 6 £1,690,000 £80 £16,055 0.95 % 0.08 % 140,833 7 1,338 0.95 % 0.08 %

Week/Period 7 £1,575,000 £65 £14,965 0.95 % 0.07 % 131,250 5 1,247 0.95 % 0.07 %

Week/Period 8 £1,595,000 £65 £15,150 0.95 % 0.07 % 132,917 5 1,263 0.95 % 0.07 %

Week/Period 9 £1,705,000 £80 £16,200 0.95 % 0.08 % 142,083 7 1,350 0.95 % 0.08 %

Week/Period 10 £1,750,000 £85 £16,625 0.95 % 0.08 % 145,833 7 1,385 0.95 % 0.08 %

Week/Period 11 £1,825,000 £85 £17,340 0.95 % 0.08 % 152,083 7 1,445 0.95 % 0.08 %

Week/Period 12 £1,900,000 £95 £28,500 1.51 % 0.14 % 158,333 8 2,375 1.51 % 0.14 %

Totals £20,865,000 £965 £219,685 1.06 % 1,738,750 80 18,307 1.06 %

http://www.igd.com/download.asp?id=3&dtid=2&did=2125

© IGD 2012


• Bring together and analyse system data to identify – hot products – which

– hot spots – or locations along the chain – where

– hot times – of day, days of the week, periods in the promotion cycle, seasons – when

• the numbers of instances or the absolute or percentage volumes of different types of waste are or seem extreme, peculiar or inexplicable

• This office based system data analysis is an essential precursor to further investigations which it will shape

• Go through all the data together, face-to-face

© IGD 2012

See how and why waste is occurring

• The system data analysis sheds some light on top level types of and reasons for material waste

• Before effective solutions can be generated the mechanics and root causes of the material waste need to be identified

• The how and why cannot be detected from the system

• They can be too easily assumed; the temptation to make assumptions, jump to conclusions and invest in changes that don’t prevent material waste has to be guarded against

• Your retailer-supplier team need to go to the hot spots at the key times, investigate the products and use investigative techniques such as the “5 Whys” to learn from those involved

© IGD 2012


• Identify the root causes and build a Loss Tree

• Process mapping to depict who does what when can help reveal root causes in, for example, the breakdowns or delays in the handoffs of information between functions deep in head office miles away from the resulting material waste

© IGD 2012


• The retailer and supplier team need to work together all the way from till to factory in-gate and through their respective head offices taking different roles depending whose territory they are on – When visiting, team members should concentrate on asking all their

questions and making all their requests to help build understanding

– When hosting, team members should concentrate on facilitating access to front line staff who can answer questions and to responding to other requests as possible

• The learning is maximised when all this can be undertaken by a cross-functional trading partner team

• Sometimes the true significance of something seen at one point is only recognised by somebody who works somewhere else along the supply chain

© IGD 2012


• Such “supply chain walks” should be arranged very carefully to maximise access and learning

• It is often tempting for a site host to dress things up in preparation for a visiting delegation without realising that this defeats the purpose of the visit

• Previously agreed working principles such as those in the ECR Collaborative Waste Prevention Toolkit help build the trust and openness required for maximum effectiveness

• Alongside its competition compliance policy IGD has a new statement of the conduct expected of participants when working on supply side projects (see www.igd.com/policies)

• This is to provide maximum clarity about what can and cannot be done with trading partners on projects such as material waste prevention projects

http://www.igd.com/policies

© IGD 2012

Generate solutions to prevent or redistribute

• A potentially very wide range of waste prevention opportunities will arise, some with no (or low) cost

• Evidence may have emerged that justifies further consideration of opportunities such as: – Joined-up management of promotions

planning, implementation and review

– Order process improvement

– Secondary packaging design improvement

– Warehouse picker responsibility alignment and education

– Tertiary packaging load stabilisation

– Avoidance of co-packing

– Line by line performance analysis and range adjustment

• These opportunities will need to be prioritised

james tupper, ecr learning & change manager, igd · © igd 2012 james tupper, ecr learning...

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