speed to customer - federation of malaysian manufacturers malaysia/i… · · 2012-10-11dettol...

Speed to Customer:Being Right, Being Fast and

Being Efficient

9th October 2012

2Copyright © 2012 Accenture All rights reserved.

• The Business Need for Speed to Customer

• Being “Right” - Insight-driven Fast Innovation

• Being “Fast” - Agile Supply Chain

• Being “Efficient” - Lean Supply Chain

• Summary


Product Innovation is a Top Priority for FMCG Companies


Responsive andFlexible Supply Chain


Lean EfficientSupply Chain


Concept & Planning

LogisticsPost-Sale Service

& Support

Consumer Insights / Concept Development•Lack of definition•Disconnected from consumer needs•Sharpen brand positioning •Raise brand awareness in emerging markets

Product Development•Low hit rates & reusability; slow time to market •Lacking in private label penetration and overall assortment ownership •New agendas to drive with supplier brands

Distribution & Transportation•Offshore slow cycle time•Lack of visibility and flexibility•Excess inventory•Excess mark-downs & obsolescence

Post-Sale Service and Feedback•Typically ignored or not timely •Often disconnected

Category Strategy& Line Planning

•Lack of Process Rigor•Slow to Move to Next Generation•Disconnected plans

Sourcing•Inflexible Sourcing Strategy•Lack of Purchasing Power•Disconnected from Retail Strategy•Lack of supplier integration

Manufacturing•Fragmented supplier base•Disconnected planning from merchandising to space to supply •Slow response time

In-Store Merchandising•Costly last mile of supply chain•Not built for speed; built for efficiency•Difficult / costly to change in store set-up

Sourcing & Manufacturing

ProductDevelopment

Merchandizing

Manufacturer / Retailer Levers• Bringing the right

products to the right customers

Copyright © 2012 Accenture All rights reserved. 7

• ↑ Market Share by being first to market with exclusive products

• ↑ Revenues through trend-right, innovative, customer-centric items and assortments

• ↑ Margin by offering the differential products that are always in stock

• ↑ OSA (On Shelf Availability) with supply chain speed and responsiveness

• ↓ Returns and Obsoletes by increasing promotion effectiveness and closeness to market

• ↓ Costs by streamlining processes and eliminating inefficiencies

• ↑ Loyalty by being Right and Fast, excellence in customer service and issue responsiveness

• Operating in the leanest, most efficient manner possible

• Delivering the right products to customers when they want it and faster than the competition

Being Right

Being Fast

Being Efficient

Speed to the

Customer






• Summary

9

Being Right

Copyright © 2012 Accenture All rights reserved.

• With increasing focus on greater ownership or influence of their product portfolios, retailers need to develop actionable segmentation and identify the features and functions across their assortments (both private and branded) that drive the right value proposition that each segment is willing to pay for.

• Product development must be built on the premise of fast innovation to ensure being first to market with what customer will want to buy.

• Retailers should leverage their network of partners to continuously consolidate their product ideas and ensure viability based on their development cycles.

Customer Insight Led

Fast Innovation Powered

Network Enabled


Capturing VoC : Reckitt Benckiser

• Uses consumer insights to extend product usage into other parts of the home

• NPD strategy aims at consumer needs for convenient & time saving cleaning products

• Leverages local R&D centers to gather local ideas, demographic, social trends

• Launched innovative products like Dettol fast mop, Air Wick, etc ignored by competitors

Voice vs. Heart of customer : Del Monte

• Del Monte sent anthropologists to observe mothers at home, making meals in the kitchen.

• VoC - 'I really want to prepare healthy food for my family’

• HoC - Insights obtained from observation –Mothers face challenges like kids pulling on their legs, less time available to prepare meals than planned for.

• Conclusion – Del Monte develop healthy, convenient products, like easy-to-open packaged fruit and frozen fruit desserts to cater to the trade-offs & shortcuts adopted by Moms.

VoC for product extension: Heinz VoC for market extension: Danone

• Result – “The upside down ketchup bottle”

• A consumer survey found that 25% stick a "knife in the bottle to start the ketchup flow, and 15% actually store it upside down.” Heinz integrated this insight into product innovation.

• Launched its ‘affordability initiative’ to expand its market share to the low-income consumers in Asia, Latin America and the Africa/ Middle East region

• Used consumer insights to develop products with lower price points, enhanced nutritional value and larger SKU sizes, without on compromising high standards for quality and food safety.

• The combination of convenience and affordability has paid off, as now 33 percent of Danone’s sales are generated in developing countries.

Converting the right set of market and customer relevant ideas through a repeatable innovation process supported by the right operating model, people and tools


Right Idea

Quality and richness of insights,

ideas and pipelinesRight

Innovation

Process

Processes to rapidly convert ideas into viable

products

• Identify the right growth opportunities• Spotting market trends and

understanding customer needs• Ensuring the product meets the

consumer needs• Customizing products as per local needs

• Identify the right growth opportunities• Spotting market trends and understanding customer

needs• Ensuring the product meets the consumer needs• Customizing products as per local needs

Right

Operating

Model

Optimize Global R&D operations

around a regional / local footprint

Right

People

and Tools

People, Tools & Infrastructure to foster

systematic execution

• Create distributed network of Innovation Centres and Innovation Shared Services

• Allocate skills base across geographies• Balance Global - Local strengths and

“power of small entrepreneurs• Structure process for global transmission

• Maximize returns from the investment on innovation/R&D

• Fostering a culture of innovation• Increasing pool of ideas• Improve receptivity and success rate of product

innovations

Effectiveness SpeedRight & Timely

Products


Open Innovation programs allow you to accelerate the commercialization of new products/services by incorporating the capabilities of external resources

• P&G’s “Connect + Develop” enables them to share R&D with worldwide partners and bring great ideas to market.

• P&G has established 1000+ active agreements with innovation partners

• 50% of product initiatives at P&G involve significant collaborationwith outside innovators.

• Identification of strategic partners• Program governance model• Determine levels of access to network

for security• Identification of key innovation metrics• Legal considerations/IP control• Cloud based networking• Technology infrastructure and training• Effective framing of challenges• Participation incentives and

mechanics• Change management to help embed

open innovation in company culture

… to Open Innovation & Value Delivery System

From TraditionalInnovation R&D Model…

… to Open Innovation & Value Delivery System

Key Considerations

In the next generation of Collaboration, companies will engage in Product Innovation but also in faster product introduction, shortening process cycles and time-to-market


Opera

tional F

ar

Sig

hte

d

Innovate Product Generate Demand Manage Supply Assure Execution

Joint Strategic Business Planning

Product Lifecycle Management Tools

Integrated Planning Tools

Analytical EnginesRetailer-CGS Data Repositories

Collaborative Platform

Org

aniza

tional A

gility

Joint Product Development

Widening the innovation funnel, and accelerating products through the funnel more quickly (succeed or fail quickly)

Greater volume of better targeted new products, faster in consumer’s hands

Collaborative Customer Insights / PromotionsDriving a “single view of the consumer” and leveraging the power of analytics via detailed customer segmentation to drive assortment and promotion decisions

Localized assortments, better promotional offers / bundles / targeted communications, and optimized trade funds

Cross-Enterprise Integrated PlanningReducing operating and working capital expense through a “virtually vertical” mindset with regard to base and promo forecasting of POS and time phased replenishment

In-stock with just the right inventory levels and reduced markdowns

In-Store Compliance / Demand SensingGrowing the business efficiently through last mile in-store execution driven through demand signal sensing and digital merchandising technology

Store and shelf accurately reflects joint retailer-supplier plans, with lowest labor costs

Poin t o fSale

ShelfDigita l camera /

Smar tphone KPI ext raction Analytics

CG&S & Retail

ADMS






• Summary

15

Being Fast


• Demand-Driven planning integrated to “one version of the truth” Operational

Capabilities

• Moving from seasonal-based, sequential assortment, category

management and product development activities to iterative, dynamic processes to rapidly bring new branded and private label products to market

• Visibility and Flexibility to monitor and course-correct effectively and

efficiently in an ever changing world. Stock-less product flow (flow thru) and Supplier Integration.

Integrated Planning Perpetual Sessions Agile Supply Chain

16

Key Tenets of Integrated Planning

• One Plan to which the company is executing….

• Tailored to distinctive supply/ demand characteristics…

• Responsive to evolving demand signals…

• Leveraging inventory management processes

that are flexible and….

• Work from a common planning model and platform…

• Driving accountability to results across the enterprise


Assortment Planning

Forecasting & Replenishment

Rolling Forecast

Company Financial Planning

In Season & Exit Management

Space Planning

Operating Unit Planning

Category Performance Reviews

Strategic Intent

Store Operations

Merchandising

Stock Accuracy

Supplier Management

Distribution

17

Enabling Speed Though an Optimized Network• Ensure optimal product availability

• Integrate recently acquired companies and/or locations

• Decide lease renewal plans for existing facilities

• Support pull- versus push- distribution

• Meet or improve customer service levels

• Accelerate the flow through the supply chain

• Manage dealer service and/or fixtures

• Support new markets, products and capabilities


Supply Chain Network Business Considerations• Minimize facility running costs

• Reduce transport logistics costs

• Minimize inventory costs

• Improve distribution capacity utilization

• Forecast cost effective solutions considering future sales growth

Optimal Supply Chain

Locations

Cost/Benefit Analysis

• Optimal product flows:− Optimal flow per product group or

supplier

• Optimal logistic parameters:− Production Costs − Transport and warehouse costs− Inventory Costs

• Required logistic capacities:− How many DCs required− Location of these DCs − Size of these DCs• Required operations (X-Dock

etc.)− Optimal inventory locations:− Centralized vs. decentralized

• Detailed cost/benefit analysis: − Inventory carrying costs− Handling & transport costs− Lost sales

• Detailed business case:− Impacts on P&L, investment

appraisal


Customer Insights/ Concept Management

Product Development

Category Strategy/ Line Plan

ManufacturingDistribution & Transportation

Post Sales Service & Feedback

In- Store Merchandizing

Sourcing

From Sequential …Linear process steps, typically executed once per season

… To Iterative & Dynamic Process linkages throughout the value chain to respond dynamically to changing

customer needs

Examples:

•Trending colors are added to the assortment next season

•Customer feedback leads to next season adjustments to an accessory or how a collection is displayed

•Slow moving products leave the store only in the arms of customers after being heavily marked down

Examples:

•Trending colors are added to the assortment in the current season •Customer feedback leads to in-season adjustments to an accessory or how a collection is displayed•Slow moving products are cost-effectively transferred to other stores / regions or channels / dot-com and sold at a higher margin

Customer

Post-Sales Service and Feedback

Category Strategy/Line Plan

Concept Development

Product Development

SourcingManufacturing

Distribution and

Transport

In-StoreMerchandising

Integrated Demand and Supply Chain Planning

Segmented SC Planning

Tailored demand planning & replenishment models by category (eg. For fashion short-lifecycles, vs. stable long lifecycles, vs. one-time products,…)

Segmented SC in Fulfillment

Tailored product flows (eg. Direct to store, stocked in supplier DC, in RDC, vs. flow through vs. cross dock,...)


Strong analytics enable High Performers to ensure that the right decisions are being taken consistently/timely at the point of impact

Being “AGILE” requires both the capabilities and the culture to operate in a fundamentally different way







• Summary

22

Being Efficient


• Minimizing approval layers, accelerating decision-making, avoiding too many meetings, ensuring true decision making power is not aggregated at too few and too high of levels.

• Awareness and understanding of end-to-end implications of key decisions which may lead to inefficiencies across the value chain

• Avoiding poorly connected processes, information gaps, and operational silos which create waste and re-work and contribute to sub-optimal cost structures.

Results Oriented Culture

Operational Effectiveness

Lean Execution

PerformanceManagement

Performance Management is a critical success factor in creating an Efficient Enterprise. It is the “link” between improvement activities and business performance

Efficient Enterprise has to be Results Oriented and supported byrigorous Performance Management to align leadership and employees on “what really matters”

23

+

Constantly review and enhance the performance

+

Cascade value-focused drivers throughout the organization

Set stretch targets based on known opportunities

Known opportunities

Stretch target


Business Performance

Operational Improvement

24

After many years of success in manufacturing industries, Lean Six Sigma is finally catching on within the retail and consumer goods industries

Lean Six Sigma (LSS) is a continuous improvement methodology that combines two of the most powerful improvement engines available to business today.

Examples of Lean at Leading Retailers

Excessive Inventory•A large retailer operated a group of stores in urban areas with high sales volume per square foot but little backroom space to hold inventory. The excess inventory squeezed into these space-constrained stores led to multiple

•handling of product, difficult inventory management, inefficient use of labor, frustrated associates and managers as well as negative impact on the customer experience.

•Without negatively impacting in-stock products or sales, the implemented Lean Six Sigma solutions reduced inventory by 8,800 units per store and weeks of inventory supply from 10.7 to 7.8


Kaizen: New Store Cost Reduction•Over the course of a 1-week Kaizen event, a Lean Six Sigma team discovered more than 30unnecessary components of the original design. They created a new construction process and timeline resulting in more than $5 million in annual savings and increased margin from earlier store upgrade openings.

Accelerated improvement: Weekly insert process•A large US retailer determined the advertising portion of the weekly insert took 14 work days to create. The defect rate with its current process exceeded 90 percent resulting in extensive rework.

•The team implemented solutions that reduced the cycle time from the first touch by advertising was reduced to four days, and the defect rate decreased to less than 5 percent.






• Summary

• Customer-insight driven innovation and product development and Customer segment-based products

• Operating models to optimize Global vs. Regional needs

• Social Networking Strategy to capture Voice of the Consumer

• Tight Collaboration with Customers and Suppliers

• Faster innovation cycles and increased share of innovation in revenue growth

• Integrated / Collaborative Retailer - Manufacturer dynamic supply chain planning and execution processes

• Demand-sensing supply chain and segmented product flows

• PoS Sell-out data driven insight for planning and replenishment

• Customer--centric service models and responsive supply chain

• Actively manage the complexity out of the supply chain

• Shared Logistics and Dynamic Networks

• Optimal “downstream” cost to serve driven Routes to Market

• “Upstream“ TCO approach

• Lean Manufacturing and MES / EMI actively managed

• Continuous spend visibility and supplier rationalization

Operational Imperatives


Being Right

Being Fast

Being Efficient

• Bringing the right products to the right customers

• Delivering the right products to customers when they want it and faster than the competition

• Operating in the leanest, most efficient manner possible

speed to customer - federation of malaysian manufacturers malaysia/i… · · 2012-10-11dettol...

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