Kunde Titel der Prsentation

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ECR EUROPE CONFERENCE PARIS MAY 2005
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Shopper at the Core

• Shopper based Joint Business Planning
• Shopper based Value Chain
• Consumer Driven Innovation

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What Did ECR Set Out to Achieve 10 Years Ago?

• The 1995 value chain analysis opportunity
  projection
• Cost reduction of 4.8 of consumer sales value
• Inventory reduction of 42
• Cost impact of inventory reduction 0.9 of
  consumer sales value
• Total cost impact 5.7 of consumer sales value
• The 1999 Transport Optimisation study
• Additional benefit 1.2 of consumer sales value
• Total potential cost savings 6.9 of consumer
  sales value

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Project Overview

• Academic Partnership and IBM commissioned to
  review the Business Case for ECR in Europe
• Assess achievements over the last 10 years
• Determine future opportunity for ECR
• Make recommendations for accelerating the
  adoption of ECR
• Re-energise the ECR communities

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Project Components
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Project Components
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Project Components
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Project Components
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Project Components
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Project Components
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Project Components
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GCI Scorecard Analysis What Did We Do?

• Reviewed a total of 908 records (Global)
• Date August 2001- February 2005
• Balance of retailers / manufacturers
• Key outputs
• ECR adoption scores
• Supply side performance indicators

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GCI Scorecard Analysis The Scorecard
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GCI Scorecard Analysis Adoption Levels

• Significant variation between countries and
  within countries

Range
Source GCI Scorecard database
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GCI Scorecard Analysis - Highlights

• ECR-adopters report
• An increase of Service Level by 5.7 percentage
  points
• ...which means improved by 7

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GCI Scorecard Analysis - Highlights

• ECR-adopters report
• Finished Goods Inventory cover reduced by -10
  days
• ...lowered by 20 on average

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GCI Scorecard Analysis - Highlights

• ECR-adopters report
• Reduced Out of Stocks by 4.9 percentage points
• ...which means halved

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Successful Initiatives Driven Through ECR

• On Shelf Availability Shrinkage
• A leading global retailer quantified 122m saving
  through the OSA Road Map
• Another global retailer delivered a 75 reduction
  in shrink across hypermarkets

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Successful Initiatives Driven Through ECR

• Global Data Synchronisation
• A leading European retailer delivered 30
  productivity improvement in their data management
• A leading Japanese retailer reduced item
  management costs by 2m

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Successful Initiatives Driven Through ECR

• CPFR
• Between a leading Global retailer and a major
  Health Beauty manufacturer
• Reduced lead-times from 21 to 11 days
• Increased sales by 8.5m
• Improved instock levels from 87-98

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Project Components
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Case Studies What Did We Do?

• 37 case studies, retailer-manufacturer
  collaboration across Western Europe
• Range of categories, food and non-food
• In-depth interviews with industry leaders
• Objective
• Identify patterns of drivers and barriers to ECR
  adoption
• Quantify implementation and results
• Clear patterns are evident

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Case Study Summary
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Case Study Summary
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Case Study Summary
Win-Win
Acknowledge Actual Cost
Realistic Trade Partner Expectations
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Case Study Summary
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Case Study Summary
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What Does ECR Mean to Shoppers?
Non ECRAdopter
ECR leader
Factor

• Well presented display of products

64
80

• Attractive interesting store deals promotions

73
78

• Wide product selection range Variety

66
81

• Have everything I need in one store

65
80

• Better selection of high quality brands products

63
79

• Always have what I want in stock

68
78

• A store where its easy to quickly find what I
  want

72
78
Source ACNielsen
Figures represent satisfaction
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Superior Shopper Offering
correlation 78.67
300
250
200
Weighted shopperattribute scores
150
100
50
0
0
20
40
60
80
"is a store I trust" score
Weighted score
Source Manufacturers research
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Case Study Summary Primary Success Factors

• Each factor is a key driver or barrier if not
  pursued purposefully
• Willingness to Innovate Change
• Creation of Shopper Value
• Collaborative Understanding of Partners business
  / Information Sharing
• Aligned Goals Objectives
• Aligned Measures Incentives

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Your Quick ECR Scorecard for Today
1. Do you have demonstrable examples of
collaborative working? eg, significant
information sharing
No
YesFew
Yes Many
2. Do you your Trading Partners use Category
Mgt principles to deliver differentiated
shopper offerings?
No
Starting
Yes
3. Do you set promotional success criteria and
jointly evaluate against them with your
Trading Partners?
No
Some-times
YesAlways
4. Are you able to see replenish in line with
your customers daily demand?
No
Not inTime
YesIn time
No
5. Do you have aligned ECR vision, objectives and
measures within your business?
No
Some
YesAll
Source Extracted from Entry Level Scorecard on
www.globalscorecard.net
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Project Components
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Value Chain Analysis - What Did We Do?

• Deep-dive analysis across major companies
  combined withIBM data
• Cost structures of companies analysed using
  standard setof activities
• Manufacturer and retailer benefit for each ECR
  area quantified
• Key output, expressed in terms of
• Potential Cost Savings
• Potential Inventory Reductions
• Potential Growth

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VCA Results Breakdown by ECR Improvement Concept
Cost Reductions
Demand
Integrated Demand Driven Supply
ECR Improvement Concept
Supply
Enablers
Integrators
(2 000)
2 000
4 000
6 000
8 000
10 000
Total value chain product category All Values in
m
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VCA Results Breakdown by ECR Improvement Concept
Inventory Reductions
Demand
Responsive Replenishment
ECR Improvement Concept
Supply
Enablers
Integrators
20 000
5 000
10 000
15 000
Total value chain product category All Values in
m
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VCA Results Breakdown by ECR Improvement Concept
Combined Potential Growth
ResponsiveReplenishment
CollaborativeShopperValue Creation
GlobalDataSynchronisation
OptimisePromotions
4.9
Europe
OptimiseAssortments
OptimiseNew ProductIntroductions
OperationalExcellence
6
5
4
3
2
1
0
Growth ()
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Project Components
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Macro-Economic Analysis - What Did We Do?

• Defined relevant indicators
• Sourced data from existing databases and
  companies
• Interpreted economic indices
• Explored correlations between ECR and category
  performance

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Market Development
Modern grocery formats have grown share within
this environment
France
Modern Grocery Distr (Grocery Sales) / Retail
Sales(Index 19941)
Germany

Italy
1.25
UK
Austria
1.20
Greece
1.15
Switzerland
Sweden
1.10
Portugal
Norway
1.05
Netherlands
Luxembourg
1.00
Ireland
Iceland
0.95
Finland
Belgium
0.90
Spain
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Denmark
Source Planet Retail, 2005
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Manufacturer Performance
ECR adopting manufacturers have driven category
growth
Sales Index
1.40
ECR adopter sales
Total category sales
1.20
1.00
1999
2004
Source based on several manufacturers market
research data
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Project Components
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• Belgiums annual consumer sales
• Carrefours European annual sales
• Cosmetics toiletries market in Western Europe

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ECR Implementation Pyramid
AlignMeasures Incentives
Align Goals Objectives
Cultural Intervention
Plan
Evaluate
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ECR Implementation Pyramid

• Evaluate the opportunity for greater ECR adoption
  within your business
• Quick ECR check-list is a start!
• Assess your business using full GCI Scorecard
• Question what does ECR mean to us?... what
  should it mean to us?

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ECR Implementation Pyramid

• Evaluate the opportunity for greater ECR adoption
  within your business
• Plan to incorporate proven ECR improvement
  concepts into your business strategy
• Maintain focus against cost inventory
  reductions
• Increase emphasis on creating Shopper Value
• Shopper based Joint Business Plans
• Shopper based Value Chain
• Consumer Driven Innovation

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ECR Implementation Pyramid

• Evaluate the opportunity for greater ECR adoption
  within your business
• Plan to incorporate proven ECR improvement
  concepts into your business strategy
• Cultural Intervention of the 5 Primary Success
  Factors
• Willingness to innovate and change
• Collaborative understanding of partnersbusiness
• Information sharing

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ECR Implementation Pyramid

• Evaluate the opportunity for greater ECR adoption
  within your business
• Plan to incorporate proven ECR improvement
  concepts into your business strategy
• Cultural Intervention of the 5 Primary Success
  Factors
• Align Goals Objectives
• Firstly within your own organisation vertically
  horizontally
• With your business partners

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ECR Implementation Pyramid

• Evaluate the opportunity for greater ECR adoption
  within your business
• Plan to incorporate proven ECR improvement
  concepts into your business strategy
• Cultural Intervention of the 5 Primary Success
  Factors Align Goals Objectives
• Align Goals Objectives
• Align Measures Incentives
• Internally externally

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European Market Growth Last 10 Years Projected
European Grocery Sales
Projected CAGR 3.7
Historic CAGR 5.2
billiions
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10
Year
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Context of growth - Industry Revenue
Additional 4.9 / 42 Billion
European Grocery Sales
billiions
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09
10
Year
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Context of growth - Industry Profit
Additional 3.3 / 28 Billion
European Grocery Profit
130
110
90
billiions
70
50
30
10
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10
Year
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In Summary

• ECR has delivered clear benefits over the last 10
  years
• Significant opportunity for ECR remains
• Drive cost out of the supply chain
• Stimulate and drive significant growth
• Economic environment remains challenging
• Proven recommendations to accelerate and reap ECR
  benefits
• Jointly satisfying shopper needs at the core
• Its now down to us