欧莱雅集团供应链诊断报告课件

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1、LOral Supply Chain DiagnosticMarch 18,2004LOral Supply Chain Diagnosti1Presentation Agenda I.Project Scope and ActivitiesII.Overview of Our Supply Chain FindingsI.ProcessesII.Inventory ReviewIII.Maturity ProfilesIV.Organization/People and Culture V.TechnologyIII.Supply Chain RoadmapIV.Discussion of

2、Next Steps2Presentation Agenda Project ScOur Project ApproachOver the past three weeks,we have:Interviewed 5 Executives of LOral CanadaFacilitated two cross-functional process workshopsCollected and analyzed dataConducted a high level maturity assessmentCompared LOral process and performance to CPG

3、best practiceIdentified key business issues and areas of improvementSummarized our findings in this presentation documentProject KickoffData CollectionInterview with ExecutivesProcess WorkshopsModel Review&Validate Base CaseReview MetricsIdentify&Consolidate Issues&OpportunitiesOpportunity Prioritiz

4、ationBenefits AssessmentFindings/Recommendation DevelopmentPresent RecommendationsDiscuss Next Steps3Our Project ApproachOver the pCross-Functional Participants Senior Management-Supply ChainSenior Management-Supply Chain Laurent Venot(Project Sponsor)Jean ValoisP i e r r e M a s s i c o t t eValry

5、MayerSalesSalesDominique De Celles Isabelle Genest Anne-Marie NelsonDion GemmityCustomer ServiceCustomer ServiceEli BengioPatricia RaposoLogistics&ProcurementLogistics&ProcurementValrie LacerteYves DubNaity JacelInformation technologyInformation technologyPierre Journel Marcelyne CraftFinance Financ

6、e Martin Deschnes4Cross-Functional Participants Presentation Agenda I.Project Scope and ActivitiesII.Overview of Our Supply Chain FindingsI.ProcessesII.Inventory ReviewIII.Maturity ProfilesIV.Organization/People and Culture V.TechnologyIII.Supply Chain RoadmapIV.Discussion of Next Steps5Presentation

7、 Agenda Project ScProcessesDemand PlanningDemand PlanningSupply PlanningSupply PlanningOrder FulfillmentOrder FulfillmentDevelop Sales ForecastMaintain Promotional PlanConsider inventory levels,backorder reports,safety stock levelsConsolidate and consider external data(POS,Nielsen,Customer data)Reco

8、ncile Demand Plan with BudgetNew Product IntroductionsNet Inventory and Lead Times from the ForecastDistributed Requirement PlanningCapacity Requirement PlanningCustomer AllocationsCommunicate forecast to SuppliersReceive supplier commitmentProcess Customer OrdersPlan and Manage Finished Goods Inven

9、toryPicking and PackingManage Outbound Product FlowManage shipping&transportationGenerate InvoiceCredit management and A/R(*)Out of scope6ProcessesDemand PlanningSupplyDemand Planning Issues and OpportunitiesIssuesManual and Inconsistent ProcessesThe forecast process is mostly manual,inconsistent ac

10、ross brands and divisions(due to different levels of maturity)as well as both time and resource consumingThere is no formal process for determining which products should be focused on during the forecasting meetingsNo one department“owns the forecast”There is no mechanism for automatically generatin

11、g a baseline forecastToo much time is spent on manual processes,data clean-up and generating reports,leaving insufficient time to analyze data and manage exceptionsLOral Canadas brand forecasts are not all aggregated up into one forecast limiting visibility and data sharing LOral Canada does not hav

12、e simulation or“what if”capabilitiesMany disparate tools are being used to facilitate forecasting-Excel,Valo,SAP and Outils Gestion.Interfaces have been built between the various tools and systems,but manual verification is required and the current technology still does not meet LOral s requirements

13、POS,Nielsen,customer information,promotional and advertising information are not all integrated in one central repositoryOpportunityProcess RedesignSpend time forecasting products that give the highest return.Not all product lines benefit from increased attention.Focus on high margin,low volume,big

14、ticket items,high profile items and items with complements to maximize profitabilityCommunicate and reconcile forecast assumptions by conducting a formal review after each planning cycle with all stakeholders.Report forecast error and modify assumptions as appropriateForecasting Tool/BW Implementing

15、 a Forecasting tool will enable the automatic generation of a baseline forecast based on sales history and additional variables.Most packages allow users to select a statistical model,enable the system to determine the model with the greatest fit or employ a composite model The forecasting tool sele

16、cted should allow for the generation of alerts based on predefined tolerances,highlighting the products that require further consideration and manual interventionProducts should be reviewed to determine which ones are critical or high margin to plan in a Forecasting tool,while non-critical or stagna

17、nt products may be planned in SAP R/3 The forecasting tool selected should provide“What If”simulation capabilities to demonstrate the impact of a variable change(e.g.price change)Coordinate data collection for all available sources and house it in a central repository such as SAP Business Warehouse7

18、Demand Planning Issues and ODemand Planning Issues and OpportunitiesIssuesOpportunityPeopleEnsure the Planning Team is Cross-Functional and Cross-Trained:LOral will need to evaluate their resources skills and determine if additional resources are required to gain forecasting expertiseStatistical pro

19、ficiency and system expertise should be balanced with industry,company and product knowledge Cross-training sharpens skills,broadens perspectives and improves communication Create incentives to improve the accuracy of forecasts:Establish forecast accuracy goalsEstablish compensation structureMonitor

20、 and review congruence of goals to rewardsThis will remove trade-offs between forecast accuracy and performance against forecast,leverages key information and helps eliminate biasesLOral Canada has started to tie compensation to forecast accuracy.This practice will obtain greater acceptance among em

21、ployees once a tool to support the process has been implementedDepartments Involved have Different PrioritiesWhile the generation of the forecast is a collaborative effort between Sales,Marketing,Finance and Logistics,the involved parties do not share the same view of the forecasts importance nor ap

22、preciate the impact of their input(or lack thereof)on other departments ability to execute their functions downstreamSales is seen as too distant from the customer and therefore lacking pertinent data to input into the forecasting e.g.which store carries which SKUSales strategy to push products at t

23、he end of the month and year by decreasing prices,throws off the forecastLOral Canada realizes that even if they implement a forecasting tool,without the proper processes or resources in place,forecast accuracy will not likely improve LOral Canada experiences a high turnover among sales and marketin

24、g people resulting in the loss of vital customer and product informationTraining for Sales and Marketing resources is insufficient.Compensation re-evaluation has begun to align individual goals and metrics with organizational goals with respect to forecast accuracyAlthough LOral Canada has made grea

25、t strides in improving their forecasting process,the accuracy has not improved significantly leading to feelings of frustration among employees8Demand Planning Issues and ODemand Planning Issues and OpportunitiesIssuesOpportunityProduct Launches Although LOral Canada has access to other countries la

26、unches as well as to like products sales history,there is no tool or process in place to effectively incorporate this data into their forecastsLOral Canada is unable to accurately assess the cannibalization effect of one product on anotherNo post-mortem analysis is conducted or captured on failed pr

27、oduct launches as input to future launchesPromotionsThere is currently no means to accurately cleanse promotional uplifts from sales history Past promotional performance is not adequately measured,therefore making it difficult to predict the impact of future promotionsPromotions involving giftware c

28、an lead to imbalances in demand,making it difficult to predict true demand for these products“One Shot”promotions are difficult to planProduct AllocationProduct allocation has not been deployed effectively and has even led to undesirable forecasting behaviours Product Lifecycle ManagementInvestigate

29、 APS functionality to handle:“Like Modeling”whereby sales history of a similar product is used to forecast a new productPhase In/Phase Out of products which entails weighting the forecast to reflect a products lifecycleThe separation of the promotional uplift from baseline forecast generationCanniba

30、lizationData CleansingSufficient time must be spent cleaning data such as SKU changes,data errors,duplication,one-time events,stock-outs,promotions,outliers etc to enable forecasting models to separate business growth from seasonality and other deviationsProduct AllocationAllocation is a useful tool

31、 for ensure higher priority customersobtain increased service levels in cases of shortages.LOral should develop and implement formal policies for allocating products(e.g.based on customer forecasts)Allocation configuration should be modified to reflect the new policies in SAP R/3.In the long-term ad

32、ditional allocation functionality could be explored in an APS tool9Demand Planning Issues and ODemand Planning Issues and OpportunitiesIssuesOpportunityCustomer Collaboration Cross-Share Forecasts with Key CustomersIncorporate customer forecasts which are deemed as reliable into baseline forecasts a

33、nd challenge their numbers(manage by exception)Once forecasts are more accurate,LOral should provide a website to allow easy access for their Customers to enter their forecasts and to post LOrals confirmed quantities for customers to validate in a timely manner Aggregation/DisaggregationDetermine th

34、e appropriate level to forecast e.g.SKU/customer location for DSD,SKU/Customer DC for warehouse shipmentsAn APS solution will facilitate the aggregation and disaggregation of the forecast,however,time should be spent determining the appropriate level for forecasting.Top-down approaches can mask tren

35、d shifts while bottom-up approaches may not consider effects shared across brandsMeasuring Forecast Inaccuracy Order date should be used as the point for establishing demand since it gives the most accurate information on when demand is initiated.Otherwise stock-outs,lost sales,opportunity costs and

36、 lost customers may be maskedEnsure the full aggregated costs of forecast error are measured:Insufficient inventory(stock outs)Excess inventory(returns,spoiled,destroyed,obsolete,slow moving)Safety stockExpediting costsInventory carrying costsOvertimeCustomer CollaborationAlthough some of LOral Cana

37、das customers provide forecast and POS data,LOral does not possess the infrastructure or processes to effectively use the dataLOral Canada must first focus on improving its own processes before extending their processes and data out to share with Customers and SuppliersForecast Accuracy While foreca

38、st accuracy is better at the Brand level,it varies greatly at the SKU level regardless of product classification(A,B,C)Only 40%to 50%of items achieve the target of tolerance of 20%(BIC 75%of SKU achieve this target)SKU ranking has been erroneousImpacts of Forecast InaccuracyNumerous forecast modific

39、ation requests to the factoriesCustomer Service levels(line fill rate in$)are at 92%despite target s of 98.5%(BIC is 99%)Inventory Write-offs are at 10.5%(BIC for CPG is 2%)Inventory Turns are 4(BIC for CPG is 17)Sales Returns are at 5.25%(BIC is 0.4%)NOTE:We are comparing LOral to CPG companies whi

40、ch is not a fair comparison in some cases.The comparison is meant as a guideline.10Demand Planning Issues and OSupply Planning Issues and OpportunitiesIssuesInputThe unconstrained forecast is the main input for developing the purchasing plan.Given LOral Canadas poor forecast accuracy,the purchasing

41、plan does not effectively meet customers demands as demonstrated by the numerous forecast modification orders sent to the plants and high inventory levelsProducts lead times,safety stock levels,min/max levels are not reviewed on a regular basisFactory ConstraintsThe purchasing frozen horizons set by

42、 the plants seem excessively long and are not reviewed sufficiently.Therefore,LOral Canada must place orders far in advance,often before they are able to assess trendsThe plants confirm back all ordered quantities since replenishment lead time is used.As a result,LOral does not obtain a real view of

43、 supply or capacity constraintsThe factories are Product focused rather than Sales/Customer focused.The result is a Push model rather than Pull.LOrals factories occasionally push excess stock to the DCs rather than trying to match customers requirementsNo global supply planning is engaged in at LOra

44、l.Each LOral Sales Company is prescribed where to buy each product and can only look to other factories in cases of shortage/capacity constraintsOpportunityFactory ConstraintsCollaborative Planning with the plants would involve LOral Canada posting their forecast on the Web and allowing the factorie

45、s to confirm the quantities they can supply against the forecast in a timely mannerContinue to roll-out one of the newer LOral Canada processes whereby products are stocked in the US and shipped directly to customers in Canada to reduce inventory levels and costsLong Term Once LOral Canada has impro

46、ved their forecast accuracy,they will be in a better position to approach the factories to discuss:Shortening frozen horizons Communicating issues Obtaining visibility to the plants production schedules to gain a better sense of supply plans and capacity constraints Receiving ASNs to give LOral Cana

47、da a true sense of their ATP to pass on to their customersDevelop new policies and education program across LOral companies to ensure customer service levels are the primary focus rather than factory throughput and costsAll LOral company forecasts should be rolled up to a central supply chain group

48、for global supply planning purposes.This would enable global fulfillment to match supply with demand11Supply Planning Issues and OSupply Planning Issues and OpportunitiesIssuesOpportunityAllocationThe US Factories ought to be allocating stock in ratio to LOral Sales Companies forecasts.This would:En

49、courage the LOral Sales Companies to improve their forecast accuracyEnsure fair share allocation in shortage situations since each Sales Company would obtain stock in proportion to their forecastBeyond the forecasted amount stock could be allocated on a“first come,first serve”basis The US Factories

50、should measure and be compensated based on their ability to service all of North America and not just the US VMIImplement an APS tool that includes VMI functionality and choose a pilot customer to model with before extending the functionality out to other customersLeverage the VMI experience of LOra

51、l USA(e.g.Lancme)Product HarmonizationWhere possible,continue to roll out the process of manufacturing with Final Assembly,whereby products are produced and finished to the point of localization steps Factory Constraints(contd)Canada makes up only 3%of LOrals global sales,while the US which supplies

52、 Canada makes up 28%of LOrals global sales.Therefore,LOral Canadas requirements are only fulfilled once the USs needs have been satisfied.There is no formal process to allocate stock between Canada and the USThe US factory is measured based on its ability to meet the US requirements instead of North

53、 Americas.This KPI further encourages the US factory to disregard Canadas ordersVMIA few key customers have expressed a willingness to establish a VMI relationship,but LOral Canada does not yet have the process and infrastructure to fulfill this requestProduct LaunchesThe rush to bring new products

54、into the market is causing launch dates to be pushed up with an insufficient buffer.The result is that the supply does not arrive in time to meet the advertising timelines LOral and its customers have already committed toProduct HarmonizationMany products cannot be harmonized due to local legal requ

55、irements including language and DIN#s12Supply Planning Issues and OOrder Fulfillment Issues and OpportunitiesIssuesCustomer Segmentation and Service Levels LOral customers have been segmented and task forces have been created to work with customers,yet LOral is still struggling to achieve higher ser

56、vice levels LOral is“not close enough to its customers”,the“arrogant culture”prevents LOral from listening sufficiently to Customers requirements Product allocation is not being effectively used to ensure priority customers are satisfied first in cases of product shortageAvailable To Promise(ATP)ATP

57、 accuracy is compromised due to factories vague confirmations(they only agree to supply product within a months time frame).As a result,customer service reps are unable to share ATP information with customers LOral no longer widely accepts backordersOrder Desk Customers must call LOral multiple time

58、s since separate orders are placed by brand.Some of the orders are consolidated using the transportation management system to ship to the customerOpportunityCustomer ServiceAnalyze customer profiles and subsequently customize service effort tied to profitability,customer loyalty and purchase history

59、Implement consistent communication with customers e.g.order acknowledgements,order status updates and customer satisfaction surveysWork with LOral factories to obtain more specific ATP dates(i.e.ASNs)to share with customersDetermine whether the current order entry process is suitable to meet custome

60、r needs or whether a more efficient process is required.Do most customers have separate buyers/receiving docks by brand or would they prefer a more consolidated view of LOral?TechnologyOnce the order entry process has been reviewed,there may be a need to modify Sales Area configuration in SAP SD For

61、malize product allocation business rules to ensure top customers receive priority in cases of product shortage.Begin by modifying product allocation functionality in SAP R/3 before exploring APS ATP functionalityLong TermOnce LOral has acquired greater ATP information from the factories they could e

62、xplore APS ATP functionality such as:Customization and automation of the ATP search path by customer/product combination to determine whether alternate locations or alternate products can be offered to customers in cases of product shortagesMulti-step availability checking against ATP,product alloca

63、tion and planned independent requirements13Order Fulfillment Issues andI.Project Scope and ActivitiesII.Overview of Our Supply Chain FindingsI.ProcessesII.Inventory ReviewIII.Maturity ProfilesIV.Organization/People and Culture V.TechnologyIII.Supply Chain RoadmapIV.Discussion of Next StepsPresentati

64、on Agenda 14Project Scope and ActivitiesPrWe reviewed inventory data to assess the effectiveness of LOreals planning processesData UsedMonth end inventory for January 2003Forecast&Sold-in dataShipments data Quantity received from plantsPeriodJanuary 2003 January 2004(13 months)Products 12 LOreal Par

65、is SKUsA,B,and C products for 4 categories(Hair Care,Hair Color,Skin Care,and Cosmetics)Inventory Data Review15We reviewed inventory data to Observations1.Long frozen horizons,high minimum order quantities,and inconsistent shipping practices from LOreal factories result in high inventory levels and

66、emergency expediting costs(out of scope)2.The same forecasting process should not be applied to all SKUs.It would be beneficial to re-evaluate the logic used for different product demand types.Four main product demand types were observed:Stable demand pattern Unstable demand pattern Stable pattern expect for promotionsLow Volume-Negative inventory 3.Inventory planning practices during Promotional periods result in large forecasting errors and large inventory fluctuations4.Data Issues:It is our u