Winning Through Collaboration

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KPIs for ECR - Aligned Outcomes Between Trading
Partners

• Winning Through Collaboration
• 1 September 2000

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(No Transcript)
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Half time - Scorecard review
Scorecard
Handling errors 6 8 possession
65 35 Metres gained 55
47 penalties awarded 7 3 Missed
tackles 9 5 scrum wins
9 7
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Half time scorecard
Team A
Team B
Handling errors 6 8
time in possession 65 35
Metres gained in possession 55 47
No. of penalties awarded 7 3
Missed tackles 9 5
No. of scrum wins 9 7
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Project background

• Project rationale
• The recognition of the
• general poor agreement and use of ECR-aligned
  KPIs within companies, between trading partners
  and across the food and grocery industry
• several attempts made to establish common KPIs
  since 1994
• desire for KPIs to drive consistent, joint
  behaviour to enable achievement of common
  objectives

• Project objectives
• Establish and agree common set of action
  orientated, operational KPIs which
• focus upon aligning performance with ECR
  objectives between trading partners
• are consistent, to the extent deemed relevant,
  with European and North American industry KPIs
• promote a consistent definition and common
  measurement language

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Development approach

• The KPIs have been developed in consultation with
  a wide range of industry stakeholders
• consultation by project team within own
  organisations
• open industry disclosure
• consultation with New Zealand GMA member
  companies
• liaison with Global ECR Scorecarding team
• individual meetings with industry representatives
  to ensure depth and breadth of industry coverage
  and agreement

. supported by reviewing the KPIs identified
in Europe, Asia, Canada and previous ECR studies
in Australia
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KPI framework - Now
Enabling Technology
Capability
Cost/Inventory Reduction
Quality Barcoding
Data Integrity
e-penetration
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KPI framework - Future
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KPIs - Now
Demand Management
KPI
Measurement Frequency
Industry
Trading partner
Consumer sales growth Monthly Quarterly(overall
and by category) New product success
rate Monthly Quarterly(overall and by
category) Forecast demand error
(MAPE) Monthly Quarterly(Monthly, 3 months in
advance) Forecast demand error Monthly -(Weekly,
1 month in advance)
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KPIs - Now
Supply Management
KPI
Measurement Frequency
Industry
Trading partner
Service level - vendor to DC Weekly Monthly - DC
to store Weekly Monthly - vendor to
store Weekly Monthly
Days in inventory - store Monthly Quarterly -
DC Monthly Quarterly - vendor Monthly Quarterly
Full trucks Monthly - Full pallets Monthly - Sched
uled transport adherence Monthly -
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KPIs - Now
Enabling Technology
KPI
Measurement Frequency
Industry
Trading partner
Quality barcoding (carton) Monthly Quarterly Qual
ity barcoding (pallet) Monthly Quarterly Data
integrity rate Monthly Quarterly(transmitted/rece
ived) ePenetration Index Monthly Quarterly
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KPIs - Example
Demand Management

• KPI
• Consumer Sales Growth
• (overall and by category)

• Definition
• Year on year consumer scan sales growth overall
  and by category
• Calculation basis
• (Current years sales - previous years sales)
  x 100
• Previous years sales where sales is scanned
  price at the POS x volume in consumer units
• Unit of measure
• Measurement frequency
• Monthly
• Measurement responsibility
• Retailer, wholesaler

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KPIs - Example
Supply Management

• KPI
• Service level Vendor to DC

• Definition
• Percentage of original orders (in cases)
  fulfilled in full and on time from vendor to DC
• Calculation basis
• Number of cases delivered in full and on time
  to DC
• Number of cases originally ordered by DC
• Note Back order deliveries are not considered to
  be on time
• Unit of measure
• Measurement frequency
• Monthly/weekly
• Measurement responsibility
• Retailer, wholesaler

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The way forward

• The following actions are now required to take
  the recommendations forward
• seek endorsement and sign-off by ECR Australasia
• nurture awareness and understanding of KPIs at
  individual company level and across the industry
• individual companies to assess compatibility with
  existing internal KPIs and capability to measure
• implement KPIs jointly with trading partners
• conduct post-implementation status review and
  report progress at Highlands 2001
• explore opportunity and define how KPI
  development could be progressed at the industry
  level

Status
Complete
In progress
In progress
In progress
Under consideration

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Suppliers Perspective

• KPIs are a powerful management tool particularly
  when managed jointly between trading partners.
• Additional benefits
• Greater understanding of Customers goals
  strategies
• Focus on solutions not issues
• Proactive management vs. reactive
• Ability to benchmark with peers
• Improved customer service through faster response
  time
• Increased capacity
• More enjoyable environment
• The path may not be an easy one but the rewards
  from improved collaboration are very
  evident.

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Suppliers Perspective cont.

• Internal alignment is the first and greatest
  challenge
• Natural resistance to change
• Existing KPIs, process and systems
• Management of KPIs cross different corporate
  functions
• Senior management support is critical to success.

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Suppliers Perspective cont.

• Where to start
• Gain an understanding of the KPIs, their
  definitions, their benefits
• Gain an understanding of the KPIs currently in
  use in your organisation
• How do they differ ?
• How do those of your trading partners differ?

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Suppliers Perspective cont.

• What would it take to standardise existing KPIs
  or introduce new ones?
• What are the implications to your Organisation?
• required data sets
• process
• systems
• people
• Assess where to start based on your goals
  strategies

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Suppliers Perspective cont.

• Gain alignment and support from Senior
  Management.
• Adopt standard Work Process Change methodology to
  introduce changes that are sustainable.
• Set targets or modify existing targets.
• Ensure regular review of KPI performance and how
  KPIs drive results.
• Develop a process of action planning to build
  performance of KPIs.

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Case study Data integrity
Error Free
100
90
Process/system improvement integrity
80
Price data integrity
70
60
50
Target achieved
Physical data integrity
40
30
1
2
4
13
14
15
16
12
11
10
9
8
7
6
5
3
Elapsed months
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Case study Quality barcoding
Quality Barcoding
100
90
80
System integrity
70
60
Product group 2
50
40
30
Product group 1
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Target achieved
10
0
1
2
3
4
5
6
7
8
9
10
11
12
Elapsed months