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VM I a s t e c h n o lo g y

t o im p r o v e O S A

a n d t o c o n t r ib u t e

g r o w t hBy Olga Khruscheva, SC Business Planning & Customer Integration Director,APICS CSCP

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C o n t e n t

Do you feel the difference?

How we do it…

What’s available to influence?

How it might look like?

OSA as a subject for consideration

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Wh a t is a v a ila b le o n?s h e lf

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C o n s u m e r b e h a v io r if w a n t e d p r o d u c t is n o t

o n s h e lf

36% B u y s o t h e r

b r a n d

19% B u y s in

o t h e rs t o r e20%

B u y s a n o t h e r

f la v o r

17% B u y s

p r o d u c tla t e r

8%’ D o e s n t

b u y a t a l l

+ = Retailer sales loss

+ = Supplier sales loss

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D a n o n e B e lg iu m O S A R e s u lt s

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Ar e o u r p r o d u c t s a lw a y s a v a ila b le t o o u r

?s h o p p e r s

Manufacturer Retailer

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Ve n d o r M a n a g e d In v e n t o r y is v e r y u s e f u l t o im p r o v e

, Av a ila b il i t y lo w e r s t o c k s u p s t r e a m o f t h e f a c t o r ie s

VM I

FMCGPlant

Raw material warehouse

Raw materials

supplies

Supplier’s plant

K e y p r in c ip le s o f VM I

• Supplier’s stock is managed by producer• Open data • Orders made by Supplier

B e n e f it s

• Stock reduction in total SC • Reducing Bullwhip effect• Better service levels

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Wh y n o t a p p ly VM I o n U p s t r e a m p a r t w it h

?s a m e b e n e f it s a s u p s t r e a m

FMCGPlant

WAREHOUSE OF SUPPLIER

STORE

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Im p r o v e m e n t o n t h e t r a d it io n a l P r e s e l le r

m o d e l

Order taking

Stock \ FIFO control

Price

Fridge \ POSM

Promo

Promo materials

?F o c u s

Sales Rep.(50 stores)

F o c u s

Stock takingShelf \ FIFO control

OSA, PPED

Merchandiser(1-3 stores)

F o c u s

PriceFridge \ POSM

Promo Promo materials

4P

KA Executive(20 stores)

F o c u s

Stock controlOrder TakingAssortment

Promo managementOOS

VOLUME CONTROL

OSA, PPED

Order Creator(40 stores)

CONTROL AND FOLLOW UP

CONTROL AND FOLLOW UP

CONTROL AND FOLLOW UP

CONTROL AND FOLLOW UP

SALES SC

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• Development, testing IT ordering tool• Creating Central ordering team • Creating Key Account executive team• Merchandizers team• Start stock counting• After 6 weeks of history – start ordering

M a in c h a n g e s inp r o c e s s

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B illa is c o m p a n y f o rc u s t o m e r s

, O n e o f t h e le a d e r s in E u r o p e R e t a il m a r k e t 1 9 2 4 6 9 f o u n d e r in a n d b e in g p r e s e n t e d b y

3 s u p e rm a r k e t s a n d h y p e rm a r k e t s in R u s s ia

2 0 0 4 s in c e y e a r . M is s io n s t a t e m e n t

•It is all about our customers•Innovations and changes develop our business•Best partner for our suppliers

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• Count sales average [(1+2+1+3)/4=1.75~2)]• Reduce by available stock [2-22=-20<0]• Promo start so

O r d e r c a n b e c r e a t e d lik e

How reliable sales data?

How accurate stock?

If full information used for promo calculation?

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• Stock & Sales integration

• Sales Estimation based on Trends & Future Events (National/Regional)

• Order Validation/Modification based on Store Specificities

D is t r ib u t io n D is t r ib u t io nC e n t r eC e n t r e

Lin e a c o mP r in c ip le s

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O r d e r c r e a t io np r o c e s s

Count stock and lossSend stock and loss

information to OC

Enter order to the customer’s system

Enter stock and loss to the systemCheck stock count accuracy Create order based on history and promo

Order-fax

- Merchandizer

- Order creator (OC)

Order

- SAP

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B a s ic F o r e c a s t in gp r in c ip le s

Based on the cleaned sales history an estimation for the next sales period is made.This estimated sales is influenced by:

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B a s ic O r d e rp r in c ip le s

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B a s ic O r d e rp r in c ip le s

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F o r e c a s t in g

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B a s ic O r d e rp r in c ip le s

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245

-165

-480590

-225

-600725

400

Begi

n St

ock

P1

Del

iver

y P1

Sale

s Fo

reca

stP1

Shor

t She

lflife

Cor

rect

ion

P1

Prop

osed

Del

iver

y P2

Sale

s Fo

reca

stP1

Shor

t She

lflife

Cor

rect

ion

P2

End

Stck

P2

S h o r t S h e lf l if e S t o c k C o r r e c t io n

Sales Order = (Sales Forecast)*(Safety stock Policy) – (Begin Stock + Delivery P1 – Short Shelflife Correction)

Quantity of Products already in Store Stock where Shelflife is too

low to sell in Period

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B a s ic O r d e rp r in c ip le s

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S a f e t y S t o c k

• Defined by Product / Store Combination• Dynamic & Automatic based on Sales Forecast (% of

Period(s) to Cover)• Alignement with Business Strategy• Alignement with Customer Expectations

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• FOCUS on Dairy, No High Performaning Tool available on market.

• IMMEDIATE & FULL listing of INNOVATIONS• TRUST in Quality by working with dedicated and

experienced PEOPLE • HIGHLY REACTIVE in a Fast Moving

Environment

?Wh y VM I b y D a n o n e

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: B illa s o m e t h in g t oc o m p a r e

2. OSA in Billa stores with Central

OrderingOSA 93,0%

OOS 7,0%

1. OSA in Billa stores w/o Central

OrderingOSA 83,3%

OOS 16,7%

OSA83,3%

OSA93,0%

OOS16,7%

OOS7%

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: B illa s o m e t h in g t oc o m p a r e

Vertical Growth in Billa, 2009 vs 2010

1 6 ,7%

8 ,7 %

N o c e n t r a l

o r d e r in g

C e n t r a lo r d e r in g

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O S A is w e ll c o n t r ib u t e d f o r

g r o w t h

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!Th a n k y o u, M o s c o w

2 0 1 0