Jill Connell

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The Profit Impact of ECR

• Jill Connell
• Business Manager - Non Food
• Franklins Limited

Garry OSullivan Managing Director Focus
Information Logistics
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When have you heard

• I know I can take cost out of my supply chain,
  but where are the big wins?
• Sure I can eliminate out-of-stocks, but what
  will it cost me?
• How do I convince my customer this product is a
  star performer

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• and
• I need answers now,
• not in 9 months time !

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So.I need a measurement approachwhich is

• pragmatic
• fast
• bottom-line focussed
• useful right along the supply chain

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Agenda

• Profit Impact explained
• Case Studies
• Want to know more?
• Questions Discussion

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Profit Impact of ECR
A pragmatic approach to Cost Profit assessment
based on measuring TRUE PROFIT
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TRUE PROFIT means
REVENUE RELEVANT COSTS
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The Profit Impact Approach
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The Profit Impact Methodology
6 Steps
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The Profit Impact Activity List
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The Activity Wizard
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The ECR Profit Model
Developed by PAP official ECR Europe Consultants
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Where can I use it ?

• Option Evaluation - Efficient Unit Loads
• Problem Resolution - Out-of-Stocks
• Category Financial Analysis - Weekly results
• Cost-to-Serve Analysis - eg Investment buying

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Where can I use it ?
Over 100 Profit Impact projects completed,
including

• 4 Retailers 3 Suppliers in Europeevaluated
  alternatives for standard pallet heights
• Sonae (Portugal) Procter Gambleevaluated
  cross docking vs DC storage

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Where can I use it ?

• Albert Heijn (Netherlands) Douwe
  Egbertintegrated true profit measurement into
  everyday category management process

• Major Australian Food Manufacturermeasured
  profit impact of eliminating investment buying by
  customer

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ECR Australasia Case Studies

• Category Financial Analysis
• Cost to Serve Analysis

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How we worked
Lever Rexona
Franklins
Focus
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Case Study Timescale
6 Steps
Agree objectives
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Case Study Cost to Serve
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Case Study Cost to Serve
In Store
Storage Room
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Case Study Category Financial Analysis

• True Profit Performance of Total Category
• by
• Sub category
• Brand
• SKU
• Vendor
• Pack Size
• Store type

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Case Study Results
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Category Analysis What did it deliver ?
Illustrative data only
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Category Analysis What did it deliver ?
Illustrative data only
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Category Analysis What did it deliver ?
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Category Analysis What did it deliver ?
Retailer Performance Bubble Matrix by Product
Support togrow volume C
0.25
Top Priority A
0.20
0.15
0.10
True Profit P/Unit Variance from
0.05
Avg
0.00
-0.05
D Delete orshow cause
-0.10
B Profitabilityan issue
-0.15
-0.20
-0.25
-15
-30
-45
0
15
30
45
60
75
Illustrative data only
lt-- Units Sold Variance from Avg --gt
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Cost to Serve What did it deliver ?
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What did we achieve ?

• Ranging Decisions Made
• SKUs for focus identified
• Joint supply chain improvement projects
  identified

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Other Benefits

• Further developed trust
• Quality results quickly
• Developed understanding of each others business

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What next ?

• Pursue improvement projects
• Monitor results

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What next ?
Evaluation of Alternatives
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In summary

• Quality information very quickly
• Following the process builds trust
• Role of Focus was key
• Potential to use for Portfolio Analysis

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You get what you measure!
Profit Impact is a key measure to use in other
ECR intiatives

• KPIs
• E-Commerce
• Demand management
• Category management

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To get started

• Read the ECR Australasia Report
• The Profit Impact of ECR
• Attend a Seminar

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Profit Impact Seminars

• For senior Category and Supply Chain Personnel
• 2 Hours, 8-10 participants
• Sydney and Melbourne
• Next Seminar Sydney, 8th September
• See Handout for details

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For Seminar Informationcontact Focus

• Ring on [phone]
• Email to info _at_ fil.com.au
• Fax on [phone]

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