欧莱雅供应链诊断.ppt

L Or alSupplyChainDiagnostic March18 2004 PresentationAgenda ProjectScopeandActivitiesOverviewofOurSupplyChainFindingsProcessesInventoryReviewMaturityProfilesOrganization PeopleandCultureTechnologySupplyChainRoadmapDiscussionofNextSteps OurProjectApproach Overthepastthreeweeks wehave Interviewed5ExecutivesofL Or alCanadaFacilitatedtwocross functionalprocessworkshopsCollectedandanalyzeddataConductedahighlevelmaturityassessmentComparedL Or alprocessandperformancetoCPGbestpracticeIdentifiedkeybusinessissuesandareasofimprovementSummarizedourfindingsinthispresentationdocument ProjectKickoff DataCollection InterviewwithExecutives ProcessWorkshops ModelReview ValidateBaseCase ReviewMetrics Identify ConsolidateIssues Opportunities OpportunityPrioritization BenefitsAssessment Findings RecommendationDevelopment PresentRecommendations DiscussNextSteps Cross FunctionalParticipants SeniorManagement SupplyChainLaurentVenot ProjectSponsor JeanValoisPierreMassicotteVal ryMayer SalesDominiqueDeCellesIsabelleGenestAnne MarieNelsonDionGemmity CustomerServiceEliBengioPatriciaRaposo Logistics ProcurementVal rieLacerteYvesDub NaityJacel InformationtechnologyPierreJournelMarcelyneCraft FinanceMartinDesch nes PresentationAgenda ProjectScopeandActivitiesOverviewofOurSupplyChainFindingsProcessesInventoryReviewMaturityProfilesOrganization PeopleandCultureTechnologySupplyChainRoadmapDiscussionofNextSteps Processes DemandPlanning SupplyPlanning OrderFulfillment DevelopSalesForecastMaintainPromotionalPlanConsiderinventorylevels backorderreports safetystocklevelsConsolidateandconsiderexternaldata POS Nielsen Customerdata ReconcileDemandPlanwithBudgetNewProductIntroductions NetInventoryandLeadTimesfromtheForecastDistributedRequirementPlanningCapacityRequirementPlanningCustomerAllocationsCommunicateforecasttoSuppliersReceivesuppliercommitment ProcessCustomerOrdersPlanandManageFinishedGoodsInventoryPickingandPackingManageOutboundProductFlowManageshipping transportationGenerateInvoiceCreditmanagementandA R Outofscope DemandPlanning IssuesandOpportunities Issues ManualandInconsistentProcessesTheforecastprocessismostlymanual inconsistentacrossbrandsanddivisions duetodifferentlevelsofmaturity aswellasbothtimeandresourceconsumingThereisnoformalprocessfordeterminingwhichproductsshouldbefocusedonduringtheforecastingmeetingsNoonedepartment ownstheforecast ThereisnomechanismforautomaticallygeneratingabaselineforecastToomuchtimeisspentonmanualprocesses dataclean upandgeneratingreports leavinginsufficienttimetoanalyzedataandmanageexceptionsL Or alCanada sbrandforecastsarenotallaggregatedupintooneforecastlimitingvisibilityanddatasharingL Or alCanadadoesnothavesimulationor whatif capabilitiesManydisparatetoolsarebeingusedtofacilitateforecasting Excel Valo SAPandOutilsGestion Interfaceshavebeenbuiltbetweenthevarioustoolsandsystems butmanualverificationisrequiredandthecurrenttechnologystilldoesnotmeetL Or al srequirementsPOS Nielsen customerinformation promotionalandadvertisinginformationarenotallintegratedinonecentralrepository Opportunity ProcessRedesignSpendtimeforecastingproductsthatgivethehighestreturn Notallproductlinesbenefitfromincreasedattention Focusonhighmargin lowvolume bigticketitems highprofileitemsanditemswithcomplementstomaximizeprofitabilityCommunicateandreconcileforecastassumptionsbyconductingaformalreviewaftereachplanningcyclewithallstakeholders ReportforecasterrorandmodifyassumptionsasappropriateForecastingTool BWImplementingaForecastingtoolwillenabletheautomaticgenerationofabaselineforecastbasedonsaleshistoryandadditionalvariables Mostpackagesallowuserstoselectastatisticalmodel enablethesystemtodeterminethemodelwiththegreatestfitoremployacompositemodelTheforecastingtoolselectedshouldallowforthegenerationofalertsbasedonpredefinedtolerances highlightingtheproductsthatrequirefurtherconsiderationandmanualinterventionProductsshouldbereviewedtodeterminewhichonesarecriticalorhighmargintoplaninaForecastingtool whilenon criticalorstagnantproductsmaybeplannedinSAPR 3Theforecastingtoolselectedshouldprovide WhatIf simulationcapabilitiestodemonstratetheimpactofavariablechange e g pricechange CoordinatedatacollectionforallavailablesourcesandhouseitinacentralrepositorysuchasSAPBusinessWarehouse DemandPlanning IssuesandOpportunities Issues Opportunity PeopleEnsurethePlanningTeamisCross FunctionalandCross Trained L Or alwillneedtoevaluatetheirresourcesskillsanddetermineifadditionalresourcesarerequiredtogainforecastingexpertiseStatisticalproficiencyandsystemexpertiseshouldbebalancedwithindustry companyandproductknowledgeCross trainingsharpensskills broadensperspectivesandimprovescommunicationCreateincentivestoimprovetheaccuracyofforecasts EstablishforecastaccuracygoalsEstablishcompensationstructureMonitorandreviewcongruenceofgoalstorewardsThiswillremovetrade offsbetweenforecastaccuracyandperformanceagainstforecast leverageskeyinformationandhelpseliminatebiasesL Or alCanadahasstartedtotiecompensationtoforecastaccuracy Thispracticewillobtaingreateracceptanceamongemployeesonceatooltosupporttheprocesshasbeenimplemented DepartmentsInvolvedhaveDifferentPrioritiesWhilethegenerationoftheforecastisacollaborativeeffortbetweenSales Marketing FinanceandLogistics theinvolvedpartiesdonotsharethesameviewoftheforecast simportancenorappreciatetheimpactoftheirinput orlackthereof onotherdepartments abilitytoexecutetheirfunctionsdownstreamSalesisseenastoodistantfromthecustomerandthereforelackingpertinentdatatoinputintotheforecastinge g whichstorecarrieswhichSKUSales strategytopushproductsattheendofthemonthandyearbydecreasingprices throwsofftheforecastL Or alCanadarealizesthateveniftheyimplementaforecastingtool withouttheproperprocessesorresourcesinplace forecastaccuracywillnotlikelyimproveL Or alCanadaexperiencesahighturnoveramongsalesandmarketingpeopleresultinginthelossofvitalcustomerandproductinformationTrainingforSalesandMarketingresourcesisinsufficient Compensationre evaluationhasbeguntoalignindividualgoalsandmetricswithorganizationalgoalswithrespecttoforecastaccuracyAlthoughL Or alCanadahasmadegreatstridesinimprovingtheirforecastingprocess theaccuracyhasnotimprovedsignificantlyleadingtofeelingsoffrustrationamongemployees DemandPlanning IssuesandOpportunities Issues Opportunity ProductLaunchesAlthoughL Or alCanadahasaccesstoothercountrieslaunchesaswellastolikeproducts saleshistory thereisnotoolorprocessinplacetoeffectivelyincorporatethisdataintotheirforecastsL Or alCanadaisunabletoaccuratelyassessthecannibalizationeffectofoneproductonanotherNopost mortemanalysisisconductedorcapturedonfailedproductlaunchesasinputtofuturelaunchesPromotionsThereiscurrentlynomeanstoaccuratelycleansepromotionalupliftsfromsaleshistoryPastpromotionalperformanceisnotadequatelymeasured thereforemakingitdifficulttopredicttheimpactoffuturepromotionsPromotionsinvolvinggiftwarecanleadtoimbalancesindemand makingitdifficulttopredicttruedemandfortheseproducts OneShot promotionsaredifficulttoplanProductAllocationProductallocationhasnotbeendeployedeffectivelyandhasevenledtoundesirableforecastingbehaviours ProductLifecycleManagementInvestigateAPSfunctionalitytohandle LikeModeling wherebysaleshistoryofasimilarproductisusedtoforecastanewproductPhaseIn PhaseOutofproductswhichentailsweightingtheforecasttoreflectaproduct slifecycleTheseparationofthepromotionalupliftfrombaselineforecastgenerationCannibalizationDataCleansingSufficienttimemustbespentcleaningdatasuchasSKUchanges dataerrors duplication one timeevents stock outs promotions outliersetc toenableforecastingmodelstoseparatebusinessgrowthfromseasonalityandotherdeviationsProductAllocationAllocationisausefultoolforensurehigherprioritycustomersobtainincreasedservicelevelsincasesofshortages L Or alshoulddevelopandimplementformalpoliciesforallocatingproducts e g basedoncustomerforecasts AllocationconfigurationshouldbemodifiedtoreflectthenewpoliciesinSAPR 3 Inthelong termadditionalallocationfunctionalitycouldbeexploredinanAPStool DemandPlanning IssuesandOpportunities Issues Opportunity CustomerCollaborationCross ShareForecastswithKeyCustomersIncorporatecustomerforecastswhicharedeemedasreliableintobaselineforecastsandchallengetheirnumbers managebyexception Onceforecastsaremoreaccurate L Or alshouldprovideawebsitetoalloweasyaccessfortheirCustomerstoentertheirforecastsandtopostL Or al sconfirmedquantitiesforcustomerstovalidateinatimelymannerAggregation DisaggregationDeterminetheappropriateleveltoforecaste g SKU customerlocationforDSD SKU CustomerDCforwarehouseshipments AnAPSsolutionwillfacilitatetheaggregationanddisaggregationoftheforecast however timeshouldbespentdeterminingtheappropriatelevelforforecasting Top downapproachescanmasktrendshiftswhilebottom upapproachesmaynotconsidereffectssharedacrossbrandsMeasuringForecastInaccuracyOrderdateshouldbeusedasthepointforestablishingdemandsinceitgivesthemostaccurateinformationonwhendemandisinitiated Otherwisestock outs lostsales opportunitycostsandlostcustomersmaybemaskedEnsurethefullaggregatedcostsofforecasterroraremeasured Insufficientinventory stockouts Excessinventory returns spoiled destroyed obsolete slowmoving SafetystockExpeditingcostsInventorycarryingcostsOvertime CustomerCollaborationAlthoughsomeofL Or alCanada scustomersprovideforecastandPOSdata L Or aldoesnotpossesstheinfrastructureorprocessestoeffectivelyusethedataL Or alCanadamustfirstfocusonimprovingit sownprocessesbeforeextendingtheirprocessesanddataouttosharewithCustomersandSuppliersForecastAccuracyWhileforecastaccuracyisbetterattheBrandlevel itvariesgreatlyattheSKUlevelregardlessofproductclassification A B C Only40 to50 ofitemsachievethetargetof toleranceof20 BIC75 ofSKUachievethistarget SKUrankinghasbeenerroneousImpactsofForecastInaccuracyNumerousforecastmodificationrequeststothefactoriesCustomerServicelevels linefillratein areat92 despitetargetsof98 5 BICis99 InventoryWrite offsareat10 5 BICforCPGis2 InventoryTurnsare4 BICforCPGis17 SalesReturnsareat5 25 BICis0 4 NOTE WearecomparingL Or altoCPGcompanieswhichisnotafaircomparisoninsomecases Thecomparisonismeantasaguideline SupplyPlanning IssuesandOpportunities Issues InputTheunconstrainedforecastisthemaininputfordevelopingthepurchasingplan GivenL Or alCanada spoorforecastaccuracy thepurchasingplandoesnoteffectivelymeetcustomer sdemandsasdemonstratedbythenumerousforecastmodificationorderssenttotheplantsandhighinventorylevelsProductsleadtimes safetystocklevels min maxlevelsarenotreviewedonaregularbasisFactoryConstraintsThepurchasingfrozenhorizonssetbytheplantsseemexcessivelylongandarenotreviewedsufficiently Therefore L Or alCanadamustplaceordersfarinadvance oftenbeforetheyareabletoassesstrendsTheplantsconfirmbackallorderedquantitiessincereplenishmentleadtimeisused Asaresult L Or aldoesnotobtainarealviewofsupplyorcapacityconstraintsThefactoriesareProductfocusedratherthanSales Customerfocused TheresultisaPushmodelratherthanPull L Or al sfactoriesoccasionallypushexcessstocktotheDCsratherthantryingtomatchcustomers requirementsNoglobalsupplyplanningisengagedinatL Or al EachL Or alSalesCompanyisprescribedwheretobuyeachproductandcanonlylooktootherfactoriesincasesofshortage capacityconstraints Opportunity FactoryConstraintsCollaborativePlanningwiththeplantswouldinvolveL Or alCanadapostingtheirforecastontheWebandallowingthefactoriestoconfirmthequantitiestheycansupplyagainsttheforecastinatimelymannerContinuetoroll outoneofthenewerL Or alCanadaprocesseswherebyproductsarestockedintheUSandshippeddirectlytocustomersinCanadatoreduceinventorylevelsandcostsLongTermOnceL Or alCanadahasimprovedtheirforecastaccuracy theywillbeinabetterpositiontoapproachthefactoriestodiscuss ShorteningfrozenhorizonsCommunicatingissuesObtainingvisibilitytotheplant sproductionschedulestogainabettersenseofsupplyplansandcapacityconstraintsReceivingASNstogiveL Or alCanadaatruesenseoftheirATPtopassontotheircustomersDevelopnewpoliciesandeducationprogramacrossL Or alcompaniestoensurecustomerservicelevelsaretheprimaryfocusratherthanfactorythroughputandcostsAllL Or alcompanyforecastsshouldberolleduptoacentralsupplychaingroupforglobalsupplyplanningpurposes Thiswouldenableglobalfulfillmenttomatchsupplywithdemand SupplyPlanning IssuesandOpportunities Issues Opportunity AllocationTheUSFactoriesoughttobeallocatingstockinratiotoL Or alSalesCompanies forecasts Thiswould EncouragetheL Or alSalesCompaniestoimprovetheirforecastaccuracyEnsurefairshareallocationinshortagesituationssinceeachSalesCompanywouldobtainstockinproportiontotheirforecastBeyondtheforecastedamountstockcouldbeallocatedona firstcome firstserve basisTheUSFactoriesshouldmeasureandbecompensatedbasedontheirabilitytoserviceallofNorthAmericaandnotjusttheUSVMIImplementanAPStoolthatincludesVMIfunctionalityandchooseapilotcustomertomodelwithbeforeextendingthefunctionalityouttoothercustomersLeveragetheVMIexperienceofL Or alUSA e g Lanc me ProductHarmonizationWherepossible continuetorollouttheprocessofmanufacturingwithFinalAssembly wherebyproductsareproducedandfinishedtothepointoflocalizationsteps FactoryConstraints cont d Canadamakesuponly3 ofL Or al sglobalsales whiletheUSwhichsuppliesCanadamakesup28 ofL Or al sglobalsales Therefore L Or alCanada srequirementsareonlyfulfilledoncetheUS sneedshavebeensatisfied ThereisnoformalprocesstoallocatestockbetweenCanadaandtheUSTheUSfactoryismeasuredbasedonit sabilitytomeettheUSrequirementsinsteadofNorthAmerica s ThisKPIfurtherencouragestheUSfactorytodisregardCanada sordersVMIAfewkeycustomershaveexpressedawillingnesstoestablishaVMIrelationship butL Or alCanadadoesnotyethavetheprocessandinfrastructuretofulfillthisrequestProductLaunchesTherushtobringnewproductsintothemarketiscausinglaunchdatestobepushedupwithaninsufficientbuffer TheresultisthatthesupplydoesnotarriveintimetomeettheadvertisingtimelinesL Or alanditscustomershavealreadycommittedtoProductHarmonizationManyproductscannotbeharmonizedduetolocallegalrequirementsincludinglanguageandDIN s OrderFulfillment IssuesandOpportunities Issues CustomerSegmentationandServiceLevelsL Or alcustomershavebeensegmentedandtaskforceshavebeencreatedtoworkwithcustomers yetL Or alisstillstrugglingtoachievehigherservicelevelsL Or alis notcloseenoughtoit scustomers the arrogantculture preventsL Or alfromlisteningsufficientlytoCustomers requirementsProductallocationisnotbeingeffectivelyusedtoensureprioritycustomersaresatisfiedfirstincasesofproductshortageAvailableToPromise ATP ATPaccuracyiscompromisedduetofactoriesvagueconfirmations theyonlyagreetosupplyproductwithinamonthstimeframe Asaresult customerservicerepsareunabletoshareATPinformationwithcustomersL Or alnolongerwidelyacceptsbackordersOrderDeskCustomersmustcallL Or almultipletimessinceseparateordersareplacedbybrand Someoftheordersareconsolidatedusingthetransportationmanagementsystemtoshiptothecustomer Opportunity CustomerServiceAnalyzecustomerprofilesandsubsequentlycustomizeserviceefforttiedtoprofitability customerloyaltyandpurchasehistoryImplementconsistentcommunicationwithcustomerse g orderacknowledgements orderstatusupdatesandcustomersatisfactionsurveysWorkwithL Or alfactoriestoobtainmorespecificATPdates i e ASNs tosharewithcustomersDeterminewhetherthecurrentorderentryprocessissuitabletomeetcustomerneedsorwhetheramoreefficientprocessisrequired Domostcustomershaveseparatebuyers receivingdocksbybrandorwouldtheypreferamoreconsolidatedviewofL Or al TechnologyOncetheorderentryprocesshasbeenreviewed theremaybeaneedtomodifySalesAreaconfigurationinSAPSDFormalizeproductallocationbusinessrulestoensuretopcustomersreceivepriorityincasesofproductshortage BeginbymodifyingproductallocationfunctionalityinSAPR 3beforeexploringAPSATPfunctionalityLongTermOnceL Or alhasacquiredgreaterATPinformationfromthefactoriestheycouldexploreAPSATPfunctionalitysuchas CustomizationandautomationoftheATPsearchpathbycustomer productcombinationtodeterminewhetheralternatelocationsoralternateproductscanbeofferedtocustomersincasesofproductshortagesMulti stepavailabilitycheckingagainstATP productallocationandplannedindependentrequirements ProjectScopeandActivitiesOverviewofOurSupplyChainFindingsProcessesInventoryReviewMaturityProfilesOrganization PeopleandCultureTechnologySupplyChainRoadmapDiscussionofNextSteps PresentationAgenda WereviewedinventorydatatoassesstheeffectivenessofL Oreal splanningprocessesDataUsedMonthendinventoryforJanuary2003Forecast Sold indataShipmentsdataQuantityreceivedfromplantsPeriodJanuary2003 January2004 13months Products12L OrealParisSKUsA B andCproductsfor4categories HairCare HairColor SkinCare andCosmetics InventoryDataReview Observations Longfrozenhorizons highminimumorderquantities andinconsistentshippingpracticesfromL Orealfactoriesresultinhighinventorylevelsandemergencyexpeditingcosts outofscope ThesameforecastingprocessshouldnotbeappliedtoallSKUs Itwouldbebeneficialtore evaluatethelogicusedfordifferentproductdemandtypes Fourmainproductdemandtypeswereobserved StabledemandpatternUnstabledemandpatternStablepatternexpectforpromotionsLowVolume NegativeinventoryInventoryplanningpracticesduringPromotionalperiodsresultinlargeforecastingerrorsandlargeinventoryfluctuationsDataIssues ItisourunderstandingthattheForecastdataprovidedisthelast correctedforecast ratherthantheoriginalforecastusedtomakeprocurementdecisions Wewouldexpecttherealforecastingerrorwouldthenbehigherthantheaverage 32 calculatedforthe12L OrealParisSKUsDespitenotacceptingbackorders thereisamismatchbetween Shipmentsout and Sold in forafewSKUs Thereisnoclearexplanationforthis AbsoluteForecastingError Asexpected forecastaccuracyishigherwithAitems exceptfortheHairColorcategory whichneedsfurtheranalysisTheoverallforecastingerrorsuggeststhataforecastingtoolisneededL OrealneedstoreviewitscurrentsafetystocklevelstoreflecttheforecastingerrorforeachSKUinordertopreventshortagesandreduceinventory ManagingPromotions Promotionalperiodsareknowntocreatedisturbancestodemandandinventoryplanningacrossproductclassifications DataIssues WeexpectedthedifferencebetweenSold inandShippeddatatobeunder5 BClass HairCare Wefoundsomelargedeviations upto36 betweenSold inandShippeddata Investigationintopo