ECR Award 2011 Danone - Victoria
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The document discusses Danone implementing a Vendor Managed Inventory (VMI) system with Viktoria, a retailer, to improve order and stock accuracy. Key benefits of the VMI system included reduced out-of-stock levels, lower total supply chain costs from improved execution, and automation of ordering between Danone and Viktoria's IT systems. The VMI approach created a win-win collaboration through higher sales, better in-store operations, and reduced costs for both companies.
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ECR Award 2011 Danone - Victoria
- 1. ECR Forum 2011 OSA Case Danone Viktoria Central Store Ordering Connecting Supplier and Retailer Supply Chains to improve Shopper Satisfaction
- 2. Shopper Behavior in case of Out-of-Shelf Buys other 36% Buys product brand 17% later Doesn’t buy at 8% all Buys in other 19% store Buys another 20% flavor + = Retailer sales loss + = Supplier sales loss
- 3. Ordering quality is the main reason of shelf out of stock in Russian Retail Out of Stock due to in Store execution issues Out of : Service level, Merchandising Stock 2% ordering quality 16% Product on Shelf 82% * according to ECR Russia FMCG 2010 Benchmark and Measurement by Danone
- 4. Fresh Dairy product category peculiarities Almost daily order / Fast moving goods delivery to the store Every minute counts Short shelf life from Supplier to shopper Complexity of Management of fresh dairy in-store stock and shelve is complex
- 5. What is Value proposal of Danone for Viktoria ? … to delegate to DANONE the management of store replenishment
- 6. VMI to improve OSA Key principles of VMI: - Stock is managed by Supplier - Open data STORE - Orders are made by Supplier WAREHOUSE OF SUPPLIER Benefits: - Stock reduction in total SC FMCG - Reducing Bullwhip effect Plant - Better service level
- 7. Danone developed Lineacom : a specific software to support fresh dairy product replenishment
- 8. We implemented a new sales force organization focused on service and excellence of in store execution Traditional pre-sell New Model ‘Central Ordering’ model Sales Rep. Merchandiser KA Executive Order Creator (50 stores) (1-3 stores) (20 stores) (40 stores) Order taking Stock taking Price Stock control Stock FIFO control Shelf FIFO control Fridge POSM Order Taking Price Promo Assortment Fridge POSM Promo materials Promo Promo Promo materials SALES SC management OOS OSA, PPED 4P VOLUME CONTROL OSA, PPED CONTROL AND CONTROL AND CONTROL AND CONTROL AND FOLLOW UP FOLLOW UP FOLLOW UP FOLLOW UP Focus? Focus Focus Focus
- 9. Store Order creation process In store Danone Supply Chain Order-fax Order Count stock and loss Send stock and loss Enter stock and loss to the system information to OC Check stock count accuracy Create order based on history and Enter order to the promo customer’s system - Merchandizer - Order creator (OC) - ERP
- 10. Danone order proposal is integrated automatically to retailer system by EDI 1. Order proposal Store ordering 2. Order response system Lineacom ERP DANONE EDI provider ERP Viktoria
- 11. VMI Central Ordering helped dramatically to increase Sales by increasing OSA in Victoria with 2% Central Ordering 15% OSA 98% Out of stock 2% 98% 85% Store without Central Ordering VMI Central ordering in Victoria without OSA Shelf OOS Central Ordering OSA 85% OOS 15% OSA of Danone products in Victoria YTD2011
- 12. While reducing costs by improving by Execution of in Store Operations thanks to system integration Order proposal Order response ERP DANONE ERP Viktoria Main Operational Improvements achieved Danone Victoria through VMI In store and back office order entry time decrease X X -50% Human mistakes due to manual order entry X X -100% Elimination of returns caused by discrepancies in order between Danone & Viktoria ERP from X X -100% Reduction of manual rework of delivery X X documents from 60% to 10%
- 13. a Supplier-Retailer Win- Win through Collaboration Collaboration VMI + System Integration Higher OSA + Better in Store Execution Better Business together