strategie supply chain groupe 06 2007 eng

8/6/2019 Strategie Supply Chain Groupe 06 2007 Eng

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Group Organization, Systems and Supply Chain

1

Supply Chain Department Suppliers Relationship

Group Commercial &Group Commercial & SupplySupply ChainChain DepartmentDepartment

Carrefour GroupSupply Chain Strategy


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Introduction

Carrefour Group Strategy

Logistics History and Supply Chain vision

Value Chain 2016

2003 2006 results and current situation

2007 2008 Supply Chain Strategy

Recent performance

How to work together better

Conclusion

Agenda and participants

Gerard Lavinay(Group Organization, Systems and Supply Chain Director)

Juan Cubillo / Christophe Geoffroy(Group Commercial Food / Non-Food Directors)

Gerard Lavinay

Xavier Derycke(Group Supply Chain Director)

Jean Franois Caillaud(Group Logistics Operations Director)

Xavier Hua(Group BtoB Strategy Director)

Agustin Riveiro(Group Supplier Relations Manager)

Gerard Lavinay


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Introduction

Your presence as partners and suppliers is important:

We are implementing our Supply Chain strategy and we must carry it out togethersuccessfully.

We are still reacting too slowly within the European countries whereas we mustimplement quicker, more flexible and cheaper solutions.

At the moment you are not fulfilling some basics.

Yet, we have still such progress to make together.


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1. Carrefour Group strategy

2. Logistics history and Supply Chain vision

3. Value Chain 2016

4. 2003 2006 results and current situation

5. 2007 2008 Supply Chain strategy

6. Recent performance

7. How to work together better


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3. Value Chain 2016






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3. Value Chain 2016






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Create value by maximizing shelf availability

Develop our turnover by monitoring merchandise flow.

Supply Chain Departments mission


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Logistics operations

WAREHOUSE ANDDC (Distribution Center) FLOW

Store Relations

Supplier Relations

DIRECTFLOW

Production

Shelves

Reception Stockrooms Replenishment

Logistics Supply Chain

Repl enishment forecast / Performancefollow-up

Inbound transport

Outbound Transport

From Logistics to Supply Chain


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3. Value Chain 2016






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The Evolving Value Chain of 2016

Global Commerce Initiative :etablished in october 1999 as avolontary platform.

The Purpose: to create a visionand enable a dialogue amongindustry participants to understandhow the industry should address orinfluence these forces in order toassure long-term success.

The Global Commerce Initiative intendsto use this report as a catalyst fordiscussion within the industry and withineach of our companies. Further, GCI willundertake the projects identified in thereport to help shape the future.

Jos Luis DurnChairman of the Management Board, CarrefourGroup

A.G. LafleyChairman, President and Chief Executive, TheProcter & Gamble Company

Co-Chairmen, Global Commerce Initiative (GCI)

The Global Commerce Initiative intends

to use this report as a catalyst fordiscussion within the industry and withineach of our companies. Further, GCI willundertake the projects identified in thereport to help shape the future.

Jos Luis DurnChairman of the Management Board, CarrefourGroup

A.G. LafleyChairman, President and Chief Executive, The

Procter & Gamble CompanyCo-Chairmen, Global Commerce Initiative (GCI)


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Wegmans Food Markets

Wal Mart stores

The Boots Company

Tesco

Target corporation

Royal Ahold

Pick n pay

Metro Group

Federated department stores

Corporacion E.Wong

Grupo Po de AucarCarrefour Group

Alberstons

Aeon

Retailers

Reckitt Benckiser

Philips Lighting BV

The Coca Cola Company

Sara Lee / DE

The J.M. Smucker Company

The Procter & Gamble Company

Unilever

Pepsico, Inc

Nestl

VICSMasterfoods

GS1 USLOreal

GS1Kraft Foods

GMA (Grocery Manufacturers Association)Kao Corporation

FMI (Food Marketing Institute)Johnson & Johnson

ECR EuropeHenkel KGaA

CIES The Food Business ForumGroupe Danone

AIMGeorgia-Pacific CorporationPartnersColgate-Palmolive

British American Tabacco

Crown EuropeAjinomoto

SupplierManufacturers


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For 20 years the logistics network has notmuch changed


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We are tending to


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3. Value Chain 2016






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Direction Supply Chain Groupe

Direction G nrale

Carrefour Meeting fournisseursSupply Chain management 14 dcembre 2004 10

From strategic lines to action plansHow to collaborate ?

Give the suppliers more information Global performance : stocks, service levels, shortages Promotion : forecasts, commitments, sales per store Warehouse operational data: outflow, stocks Store operational data: sales, stock per item

Implement joint action plans Stock reduction Diminution of shortages Sales increase

In 2004

Our strategic lines in 2004Direction Supply Chain Groupe

Direction Gnrale

Carrefour Meeting fournisseursSupply Chain management 14 dcembre 2004 9

Two complementary strategic lines

An incremental scenario which relies on the existingpractices. It is the phase of good management. Sharing of good practices. Store order follow-up.

A new scenario which tends to propose more flexiblesolutions. Sharing of information with suppliers. Generalization of cross-docking. The consolidation centers and warehouse consigned stocks.


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Indonesia Taiwan

Malaysia Poland Spain

Indonesia Taiwan

Malaysia Poland Spain

Thailand Brazil

Argentina Greece

Colombia China

Thailand Brazil

Argentina Greece

Colombia China

Italia* Turkey*

Switzerland France Hypermarkets

Belgium* France Multi Format

Italia* Turkey*

Switzerland France Hypermarkets

Belgium* France Multi Format

These countries logistics costs coverage is almost

balanced.

These countries logistics costs coverage is almost

balanced.

These countriess logistics cost coverage is below the balance point but they are

making progress.

These countriess logistics cost coverage is below the balance point but they are

making progress.

These countries are clearly far from the balance point.* Countries that have a recovery

plan.

These countries are clearly far from the balance point.* Countries that have a recovery

plan.

5 countries14%of the group total

5 countries14%

of the group total


6 countries8%

of the group total


6 countries78%

of the group total

Status of logistics cost coverage

The progress made was not significant enough, above all in Europe.


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Shelf ready packaging (SRP) status

Hypermarkets Supermarkets

SRP implementation in 2006 and the 1 quarter 2007 with the target at end of2007.

Source: Countries declaration according to listing in number of references

Same target: 50% of the volumes

11% 10% 11%

21%

12%

22%

9%13%

29%

14%

France Espagne Italie Pologne Grce

% PAV 2006 % PAV 2007 % 0BJ 2007

16% 15%11%

0% 0%

19%13% 13%

26%

4%

France Espagne Italie Pologne Gr ce

% PAV 2006 % PAV 2007 % 0BJ 2007


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Group total stock statement

Source: End of year financial stock (end of December)

No improvement of stocks rotation overthe last 3 years.

To answer this problems, a stock qualityplan has been implemented at the serviceof business in the main BUs: FranceHypermarkets and Supermarkets, Spain,Italy and Brazil.

Generalized action plan to accelerate thestock reduction (end of promotion,stopped items, old stock, etc).

36,0

38,2

36,1

2004 2005 2006


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21.00%

24.00%

28.00%

33.00%

40.00%

1.00% 3.00%

7.00%

2004 2005 2006 2007 2008

Cross-docking

Consigned stock

Evolution of cross-docking and warehouseconsigned stock


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Suppliers current situation 1 er quarter 2007

The delivery quality is really far from being acceptable, especially inFrance, and it is still not sufficient in all the countries.

The replenishment contract terms are not always signed, even by majorsuppliers.

The logistics costs are still not enough covered by logistics discounts.

The sharing of information on basics (such as invoices) is not sufficient.The product sheet sharing has just started.


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Suppliers current situation

Comparison of service level for the first 4 months of 2007 vs 2006

Supplier N1Dry grocery

Supplier N2Cleaning

-1,7%

-6,3%

-0,9%

-8,6%

-4,0%

-10,0%

-9,0%-8,0%-7,0%-6,0%-5,0%-4,0%-3,0%-2,0%

-1,0%0,0%

FranceHyper

France SPM Italie Espagne Belgique

-1,5%

-0,2% -0,4%

-2,9%

3,5%

-4,0%

-3,0%-2,0%

-1,0%0,0%1,0%2,0%

3,0%4,0%

FranceHyper



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Comparison of service level for the first 4 months of 2007 vs 2006


Supplier N3Cleaning

Supplier N4Dry grocery

-0,4%

-1,9%

-0,4%

4,0%

1,2%

-3,0%

-2,0%-1,0%

0,0%1,0%2,0%3,0%

4,0%5,0%

FranceHyper


-1,0%

-0,2%

0,8%

-4,2%

-2,3%

-5,0%

-4,0%

-3,0%

-2,0%

-1,0%

0,0%

1,0%

2,0%

FranceHyper


L t t


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Le constat


The Bazaar service level in France has been decreasing since June 2006.

Store service level (warehouses / stores)in SKU cumulated monthly for picking flow and cross-docking

Taux de service BAZAR TOUS FLUX

92%

93%

94%

95%

96%

97%

98%

99%

100%

Janvier Fvrier M ars Avril M ai Juin Juillet Aot Sept embre Oct obre Novembre Dcembre CUM UL

2005 2006

Objectif 2007 : 97 % tous fluxObjectif 2007 : 97 % tous fluxObjectif 2007 : 97 % tous flux

Rel 2007RR elel 20072007

Taux de service BAZAR TOUS FLUX

92%

93%

94%

95%

96%

97%

98%

99%

100%

Janvier Fvrier M ars Avril M ai Juin Juillet Aot Sept embre Oct obre Novembre Dcembre CUM UL

2005 2006

Objectif 2007 : 97 % tous fluxObjectif 2007 : 97 % tous fluxObjectif 2007 : 97 % tous flux

Rel 2007RR elel 20072007


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3. Value Chain 2016






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2007 2008 Carrefour Supply Chain Strategy

On Shelf Availability

1

We are strenghtening the implementation of the Supply Chain strategy we definedin 2004:

Increase of productrotation

2

Information sharing

3

Shelf Ready Packaging

4

Logistics costs vslogistics discounts

5


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OSA

Customer

Supplier Carrefour

The different perceptions of On Shelf Availability:

Wished Assess the OSA (On ShelfAvailability) from to thecustomers point of view.

TOGETHER

On Shelf Availability The true performance

1


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Optimizationof logistics

networksSuppliercollaboration

StoreOperationalExcellence

Control the merchandise flow

Control the information flow

BoucleComplte

Mercure

Centralizedreplenishment

Standardmtier

EDI Pooled CMI

Shelf readypackaging

Promoprocess/

CPFR

MultipickMultidrop

Consolidationcenters

NewTechno

Performance

3/4PLstrategy

BestPractices

Shelfproductivity

Data sharing

Master File

Increase of products rotation

GDS

2


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The direct flow relies on the suppliers delivery skills. The management of flowsenables to consolidate the deliveries to different stores.

The simplicity of direct flow managed centrally has to be rediscovered in Europe.

A cross-docking platform enables to improve the service to stores:1. Thanks to an order frequency higher than with direct flow: 2-3 times per week,

2. By reducing the impact of minimum order due to the consolidation of storesorders,

3. The safety stock remains in store,4. The delivery leadtime for the store is the same than with the direct flow.

Fresh food is by nature managed in cross-docking. For dry food, cross-docking is moreadapted to Hypermarket format than Supermarket/Convenience formats because of theservice frequency required.

2

The use of cross-docking should be increased, especially in Europe.



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Consolidation centre : Same service to stores than in logistics picking flow: dailydelivery, no minimum order, consolidated safety stock.

2


Entrept Multi-Fournisseur

FournisseursUsine

Fournisseurs

UsineCentre

Consolidation

Centre

Consolidation

Transport

CommunImport/F&L

Transport

CommunImport/F&L

Organisation logistique et approvisionnementsupervise par Carrefour

transport

Commandes

Appro

Facturation des commandes

Facture pour stockage& transport

MagasinsCarrefour

Magasins

Carrefour

D tail ventes en magasin et stock en magasin

Multi-supplier- warehouse

FournisseursUsine

Suppliers

factoryCentre

Consolidation

Consolidation

center

Transport

CommunImport/F&L

Common

TransportImport/F&L

Logistics organization and replenishmentmanaged by Carrefour

transport

Orders

Replenishment

Orders invoicing

Invoice for warehousing& transport

MagasinsCarrefour

Carrefour

stores

Detail of stores sales and stock


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Information sharing - Business to Business (BtoB)

BtoB processes enable to implement a new relationship with suppliers,through more information sharing, focused on economic performanceimprovement.

3

Scope ProcessesMaster File Alignement of product data : DataSynchronization

Performance review : shared scorecardOrder-invoice cycle: EDI messages

Supply Chain Data Sharing- On Shelf availability- Co-managed inventory: CMI- Shared forecasts: CPFR

e-Sourcing- Design specifications- Reverse auctions

Data Sharing Marchandise- Innovation management- Category Management

Customer Data Sharing

Supply Chain / Finance

Purchase / Marketing / Quality


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Data Synchronization

Carrefour has a global solution which has been working since the end of 2006.

Each supplier must prepare to publish online the information asked byCarrefour.

Carrefour doesnt impose any specific channel or provider, and will acceptany format / protocol that meet GS1 standards

Global Data Synchronization (GDS) Peer to peer Web Form

Started in France, Spain will follow before the end of 2007.

3



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Accelerate the roll-out of dematerialized invoice.

3

EDI providerEDI providerAS2

Internet

Store 1

Logistics

Store 2

C4 WANCARRE

FOUR.N

ET

Web screen

CARREFOUR SUPPLIER

0110101

1110110

1100111

Order Data

EDI

UNH+14

PRI++E

EDI Message

EDI Message

EDI

UNH+14

PRI++E

EDI message

Global platform


EDI message


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Information Sharing

Sharing of Point of sale data must be concomitant to the implementation ofseveral processes:

Cross-docking

Centralized store replenishmentManagement of events: promotion, listing of new product, innovation.

The methods of implementation are being defined.

The general target is to increase On shelf availability.

3


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4

SRP 6 criteria

1Reconnaissance

immdiatedu produit

2Ouverture faciledu colis

3Mise en rayon au

colis en un seulgeste

4Rep rage en unclin dil

5Facilit daccs auproduit

6Aspect toujoursmarchand encours de journe

100% facile mise en rayon 100% service pour les clients

Critres de mise enplace du PAV en magasin

1 Immediate productrecognition

2Easy caseopening

3One-shotshelf filling*

4At a glanceidentification

5Easy accessto the product

6Good displaythroughout theday

100% easy shelf filling 100% service for customers

Criteria for implementingshelf-ready packaging in store

(*) Filling + facing + reprocessing of cases after opening


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Implications related to SRP roll-out in 2007

Identification and development of SRP with the suppliers in each country.

Integration of SRP notion: from item creation to price labels and also inplanograms.

Training of teams and change management, SRP is one of the 8 key

processes of New PGC concept training.

Collaboration between stores and Merchandise Department to guarantee

the effective implementation of SRP in store and the optimization of theirquality.

Working groups in Europe ECR organizations on this strategic topic.

4



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The coverage of distribution costs by logistis discounts is a Supply Chain goodmanagement rule. We must reason in mass margin.

These logistics discounts must cover our costs: handling, transport, warehouse realestate, stock financing, etc.

This negotiation is always related to a business negotiation.

It is a continuous clarification and improvement effort to undertake each year.

In 2007, we must balance this economic equation by:strenghtening negotiations to improve an unbalanced situation in some countriesrenegotiating logistics discounts in parallel to Xdocking implementation

Costs vs logistics discounts

5


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3. Value Chain 2016






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Recent performance

Substantial implementation of cross-docking in Spain

Pooling (pooled co-managed inventory) in supermarkets in France

On-shelf availability with one supplier in several countries

Consolidation centers in France and Europe in Cavaillon

Warehouse consigned stocks in Spain (Non Food)

Roll-out of store centralized order

Pooled distribution of frozen food relying on a manufacturers logistics means in Italy

Substantial implementation of PGC (Grocery) cross-


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Evolucin % Flujos PGC

0,00%

10,00%

20,00%

30,00%

40,00%

50,00%

60,00%

70,00%

80,00%

90,00%

100,00%

ENERO DEL2006

MARZO DEL2006

MAYO DEL2006

JULIO DEL2006

SEPTIEMBREDEL 2006

NOVIEMBREDEL 2006

ENERO DEL2007

MARZO DEL2007

CajasStock

CajasTenso

Cajas XD

CajasStockDeposito

48%

Substantial implementation of PGC (Grocery) cross-docking in Spain

Substantial implementation of PGC cross-docking in


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4

5

1

2

3

6

Santander

Miralcampo

Valencia

CastellbisbalSant Fruits

Sevilla

4

5

1

2

3

6

Santander

Miralcampo

Valencia

CastellbisbalSant Fruits

Sevilla

Evolution of 2004-2007 PGC stock

Logistics stock trendPGC data

Cross-docking (4 warehouses):

1- February 2004 (Miralcampo).2- July 2005 (Levante).3- November 2005 (Santander).4- June 2006 (Sevilla)

PGC warehouse network

Cross-docking

Picking flow

The stock level in stores has increased by 2 days between 2004 and 2006.

Substantial implementation of PGC cross docking inSpain

2004

20

05

11,4101,1

1,4

2

007

12,5

2006

2004

20

05

11,4

8,31,4

- 4,2 DAYS

2

007

2

007

12,5

2006

1,7

Nber of deliveries/week 3

Delivery leadtime 48 hours

4 Cross-docking2 Picking flow

Nbre of references: 7.492

Nber of warehouses

Substantial implementation of PGC cross-docking in


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- 12 days

200

2

20

04

2003

20

05

2006

12,89,7

4,2

2007

3,4

200

2

200

2

20

04

20

04

2003

2003

20

05

20

05

2006

2006

15,4

141,4

3,1

1,2

5,5

2007

2007

0,8

Evolution of Procter & Gamble sales vs stock (2002-2007)

Logistics stock trendP & G data FOR CROSS-DOCKING

Cross-docking process (4warehouses):1- February 2004 (Miralcampo).2- July 2005 (Levante).3- November 2005 (Santander).4- June 2006 (Sevilla).

Sales evolution

(Obj)

VENTES K( )

2002 2003 2004 2005 2006 2007

+7,0% +4,2%+8,6%

+40,5%

Stock is 2.4 days lower in stores that are delivered from pickingwarehouses than in those delivered from cross-docking platforms.

days = stock units / units sold

Gillette effect

Substantial implementation of PGC cross docking inSpain

Nber of deliveries/week: 5

Delivery leadtime 48 hours

4 Cross-docking

2 Picking flow

Nber references: 271

Nber warehouses

P li ( l d CMI) i k i F


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CMI: Co-Managed InventoryPooled CMI: pooled Co-Managed Inventory

France Food Multiformat.

Already implemented: 8 groups ofsuppliers (by 2 or 3) with 6.000orders and 150.000 pallets in 2006.

The result is a drop in stock from15% to 25%.

In 2007: 3 to 5 % of PGC salesfigure will be managed in pooled

CMI.

Pooling (pooled CMI) in supermarkets in France

Multi-manufacturers VMI Cell managedby one of the manufacturers or by FM Logistic

1

2

3 3

4

4

4BndictaPlant

BananiaPlant

BndictaWarehouse

Colomiers

BananiaWarehouse

FM Logistic Longueil Ste Marie

1bis

2

1 1 bis

O Sh lf A il bilit ith li


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On Shelf Availability with one supplier

Project implemented in 2006 and continued in 2007

ArgentinaContinue OSA with Hypermarkets & extensions tomore hypermarkets

BelgiumFirst measurement has beendone & pilot in Masse deMarge categories defined

ThailandContinue with OSApilot in 3 stores

PolandOSA program willcontinue at HM & furtherroll out to supermarketsItaly

Measurements in placeTPM awarenessprogram started

GreeceOSA programme startedFirst training Carrefour Unilever people planned

TurkeyMeasurements &OSA Pilot C4 started

Target: 50% reduction ofOSA losses in 3years.

Ambition: To be best inclass on OSA,achievingCarrefourrecognition as anexpert on thissubject.

France and Europe Consolidation Center in Cavaillon


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Own brand products (PGCexcluding perishable)

The three parties: the

manufacturer, the logistics providerand the retailer agree on how towork.

For suppliers located in Spain,Italy, Greece or/and South of

France.Saving of space in platformsthanks to a drop in stocks.

France and Europe Consolidation Center in Cavaillon


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Stores centralized order (principles)


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Roll-out and strenghten the store centralized order synchronizing it with thewarehouse order (France hypermarkets, Spain, Italy, Poland)

Necessary basis for management of flows

Management of flows: choose the best flow according to the department requirementAccording to the stores format (hypermarket, supermarket, convenience,etc)

According to the logistics context

According to the division (PGC, Fresh or Non-food) or the type of product (permanent,seasonal or promotion)

Implementing the simplest organization model as possible.

Cross-docking and/or store direct flow are the flows recommended by the Group ;consolidation centers, consigned stocks or pooling can also be implemented ifnecessary.

Stores centralized order (principles)

In 2007 as a conclusion of the performance:


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France Hypermarkets: the cross-docking roll-out in PGC will reach 10% at the endof 2007.

France multiformat: rationalization of the PGC warehouse network is going on, themassification plan is growing.

In Italy, cross-docking will be extended this year to the warehouse located in the

South.

In Spain, cross-docking plan will be completed with the last distribution centers andthe implementation of suppliers consigned stocks.

In Belgium, centralized order will be launched in hypermarkets in 2008 as well aspooling and cross-docking plans.

In 2007, as a conclusion of the performance:


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3. Value Chain 2016

4.2003 2006 results and current situation




How to better work together


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OSA(On-shelf availability)

Collaborationwith suppliers

Basics

Service excellence

The Suppliers Relationships mission is to reach the suppliersService excellence

0%

100%




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Collaboration with the suppliers consists of four essential steps:

Excellence:Excellence: high availability of products inhigh availability of products in

shelves at the lowest costshelves at the lowest cost ..

AlignmentAlignment :: with suppliers on the strategy towith suppliers on the strategy totake on at the group and country level.take on at the group and country level.

Sharing:Sharing: of informationof information andand processesprocesses ..

Basics:Basics: DefinitionDefinition of serviceof service conditionsconditions andandperformance followperformance follow --up.up.

g



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Work with the Supply Chain Department of each Business Unit ; it includes Logisticsoperations as well as warehouse and store replenishment teams:

Respect of basics and replenishment contract.

The store orders parameters.The products on shelf availability.

Sales forecast (including promotion).

Work at the Group level:Sharing and challenge of service performance as well as collaborative processesperformance.

Support to joint action plans.

Close relationship with the Group Commercial Departments .

g



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Within the Group Supply Chain, a dedicated team which is made up of oneperson per zone in charge of enhancing relationship with suppliers.

Agustin RiveiroAntoine Passat(Latin America, Poland, Switzerland and RomaniaJulien Zabala(Asia, Turkey, Greece and Bulgaria)Regis Le Boucher (Sept 2007)(France, Spain, Italy, Belgium, Portugal)

g

Conclusion


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Carrefour Supply Chain strategy is strong and it allows us all to be inline with the GCI target.

Lets change and implement cross-docking properly and quickly.

React on the current delivery problems.

Lastly, focus your efforts on the real challenge: on-shelf availability.

strategie supply chain groupe 06 2007 eng

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