tackling shrinkage to improve your bottom line
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Tackling Shrinkage to Improve Tackling Shrinkage to Improve Your Bottom Line Your Bottom Line
Breakout SessionShrinkage Working Group
ECR Europe Annual Congress, BrusselsMay 2004
WelcomeWelcome
Colin Peacock
The Gillette Company
Co-chair, Shrinkage Working Group
Seminar Overview
• Purpose– Enthuse the ECR community about the ECR
shrinkage reduction methodology
• Objectives– Illustrate retailer & supplier collaboration– Promote the ECR Approach– Provide new knowledge
Agenda
• Introduction• B&Q & Plasplugs Case Study• ECR Shrinkage Survey• Sainsbury’s & Menzies Case Study• Key Performance Indicator Research• Makro & Gillette Case Study• Wrap up• Q&A
Designing in SolutionsDesigning in Solutions
Eddie Joyce, PlasplugsGill Yardley, B&Q
B&QB&Q
• Biggest home improvement retailer in the UK
• Employs over 36,000 people
• Turnover last year €5.7 billion
• Profit €546 million
• 1998 B&Q merged with Castorama to become largest DIY Retailer in Europe
• 1999 B&Q opened it’s first store in Shanghai
PlasplugsPlasplugs
Tiling Tools
Knives & Blades
SharpeningSystems
Fixings History: Founded 1970 in the UK
Family owned
Brand Values:Leadership, Quality &
Innovation
Employees:Over 350 world-wide
Turnover:Circa €59 million pa for
the group
Old PackagingOld Packaging
B&Q – Reasons for ChangeB&Q – Reasons for Change
• Sales good – yet room for category growth
• Industry standard packaging - opportunity to improve
• High shrinkage (10%+) due to damages and theft
• Environmental compliance
• Space efficiency – packaging space hungry
• Requirement for suppliers to source tag
• Opportunity to reduce Environmental tax levy
• Customer wants to touch and feel the product
Plasplugs - Reason for ChangePlasplugs - Reason for Change
• Improve visual display• Reduce returns• Introduce hidden source tagging• Reduce dependency on third parties• Improve tactile nature of packaging• Desire to strengthen market leadership
– Innovation and differentiation– Add value to product
Old PackagingOld Packaging
The ProcessThe Process
• Both companies around the table to agree requirements
• Plasplugs CEO involved from conception to delivery
• Support from B&Q Sustainability Team and Commercial team
• Solution evolved over period of time
Evolution of PackagingEvolution of PackagingBlister, Card & Adhesive
Evolution of PackagingEvolution of PackagingBlister Entrapment
Evolution of PackagingEvolution of PackagingBlister-less - Only Card
Evolution of PackagingEvolution of PackagingPackaging Free
Plaspak Demonstration
Old V’s NewOld V’s NewTile Edge Nibblers
Old V’s NewOld V’s NewQuik Tiler
Old V’s NewOld V’s NewTile Files
Old V’s NewOld V’s NewTile Scribe
Old V’s NewOld V’s NewTile Rack
The Benefits of CollaborationThe Benefits of Collaboration
• 50% reduction in shrinkage
• 33% increase in sales (€1.6M retail)
• Space created raised sales further €1.5M
• Customer can touch and feel product
• Secondary use of packaging:– Customers perceive this as ‘added value’– Reduction in environmental levy
Additional Benefits to PlasplugsAdditional Benefits to Plasplugs
• Design innovation has led to patented design solution
• Return on investment within 18 months
• Packaging deliveries now minimal
• Plasplugs are at the cutting edge of innovative packaging solutions
B&Q Tiling Accessories DisplayB&Q Tiling Accessories Display
In SummaryIn Summary
By innovation and collaboration benefits havebeen seen by both Plasplugs and B&Q.
Key Benefits
• Reduced shrinkage and stock loss• Enhanced presentation of the product• Better control of costs• Maximised space and profit per square metre
22ndnd ECR Shrinkage Survey ECR Shrinkage Survey
Adrian Beck
University of Leicester
Background and Methodology
• Last survey in 2000• Need for a new benchmark• Definition of shrinkage
– External Theft– Internal Theft– Process Failures– Inter-Company Fraud
• Stock loss calculated at retail prices
Background and Methodology
• 26 countries surveyed (21 last survey)
• 250 retail companies and 44 manufacturers/suppliers contacted
• Total FMCG sector valued at €1,004 billion
• Sample represents 13.7% of retail companies with a combined turnover of €137.2 billion
Topics Covered in the Survey
• Counting the cost
• Location of the problem
• Extent of co-operation
• Measures used to tackle shrinkage
Counting the Cost
Sector % of sales
Value (€ billions)
Retail 1.84 18.5
Manufacturer 0.57 5.7
Total 2.41 24.2
Counting the Cost
• Total loss equates to:– €66 million per day– €46,000 per minute (€4.1 million for this seminar!)
The Retailing Shrinkage Iceberg
51%
49%
Unknown Loss
€9.5 billion
Significant increase in known loss
Location of the Problem
€5.7 Billion €1.2 Billion €17.3 BillionTOTAL
€24.2 Billion
24%
Manufacturer Distribution
5%
Retail Distribution
71%
Retail Stores
+ + =
Causes of Retail Stock LossInter-
Company Fraud
7%
External Theft38%
Internal Theft28%
Process Failures
27%
Retail Company Co-operation
Spending on Stock Loss
Measures Value Per cent
Contract security staff € 950 million 33
In-house security staff/loss prevention/audit team € 419 million 14
Electronic tagging systems € 370 million 13
Closed circuit television € 298 million 10
Intruder alarm systems € 182 million 6
Cash protection equipment: safes, caches € 170 million 6
External security measures: shutters, bollards, fences € 164 million 6
Staff training on stock loss € 151 million 5
External audit companies € 44 million 2
Specialist display equipment € 29 million 1
Other € 133 million 5
Total € 2.9 billion 0.29
Causes and Spending on Shrinkage
60
38
27 28
9
26
4 7
0
10
20
30
40
50
60
External Internal Process Inter Company
Spending
Cause
Other Survey Highlights
• Companies that:– have a corporate policy– prioritise stock loss– provide bonuses for good stock loss results– have good intra-company co-operation– carry out shrink reduction projects…
… have lower levels of shrinkage
For a copy of the final report For a copy of the final report contact:contact:
Adrian Beck: bna@le.ac.uk
The UK Magazine MarketThe UK Magazine Market
An Insight Into ShrinkAn Insight Into Shrink
2525thth May 2004 May 2004 David Morton Chris Price
WELCOME
A story about addressing SHRINK In the UK Magazines sector
Sector complexity .. Process Issues How working together with wholesalers achieved results How Sainsbury’s managed to reduce shrinkage by 25% Explain how shrink on News & Magazines
is a broader Industry issue Industry-wide approach .. Results .. €3m+ Approaches, Learning's & Blue Book
EXECUTIVE SUMMARYAims & Structure
The UK Magazine Sector
•Small number of big players•Big number of small players
Medium
Publishers Wholesalers Retailers Consumers
Small
LARGE
55,0003 major5 Independent100+ Depots
10 Main Publishers3,000 Titles
160 Categories
WHS
DN
MD
Ind
The Magazine sector is worth €2.5 Billion Euros per year
International services group .. time critical logistics: T/O €1.8bn
Newspaper & Magazine distribution (UK) .. 4,000 employees
Menzies Distribution - The Facts
1500 van routes .. Every morning To 22,000 retail outlets .. From 30 depots 520,000 lines / 24 hours Unsolds scanned every day.
JIT .. Cross Dock .. Consolidation .. & .. Reverse Logistics
Sainsbury’s – The Facts
Sainsbury’s stores sell over
1200 magazine titles A UK Market share of 5.5% Top 100 titles count for
74% of turnover Losses running at over
6% of sales
WE HAD A PROBLEM!
Sainsbury’s - First Steps - Alone
Initial internal review :
Complex area .. Not main focus of Supermarkets
Inconsistent Store Procedures
High level of ‘Rejected Returns Credits’ (Sale or Return)
Wholesale supplier input .. End to End process
You will see . . How ECR provided the “introduction” agency
You will hear. .How Sainsbury’s were not alone
The SectorThe Publisher & The Product
The Product Each issue uniquely ‘created’ ..new barcode
Magazines are not like tins of beans.
The Publisher Determines look, feel, & quantity ‘created’ Places (Pushes) into the market .. advertisers, not just sales Sale Or Return … reverse logistics
The ‘Creative’ mix means risk of: Poor attention to practical detail …
Sector Tensions & Shrink
Market Tensions !!!
Shrink hit the Industry agenda late 2002 … and went TOP!
Retailers clear… “It’s Publishers’ and Wholesalers’ fault”. Publishers clear…. “No it isn’t” Wholesalers …. The meat in the sandwich!
Industry-wide collaborative project group formed Establish .. Define .. Recommend .. But an uneasy background!
End-To-EndIndustry-Wide Shrink Initiative
A Meeting of Minds? ……. More a Clashing of Heads!
Deal in Facts …. Not Noise! Definition … Principles … and Method ECR Blue Book … Recipe !
Our Principles All committed .. Solve .. Don’t just shift the problem! Overall structure .. prioritise
Industry Shrink GroupModus Operandi
Adopt a process
Research Map key processes, together Establish interdependences Highlight pressure points Measure .. Identify costs Identify solutions .. Prioritise
Good News (of sorts) We were not alone .. Shrink affects all supply chains
0.Wake Up0.Wake Up
2. Map &Measure2.Map &Measure
4. Develop Solutions4.Develop Solutions
5. Implement5.Implement
6. Evaluate6.Evaluate
1. Plan1. Plan
3. Analyse3. Analyse
End-To-End RoadmapFishing for Detail
SUPPLYISSUES
LIVEPRODUCT
Wholesalersupply
process
Systems/Information
Damage
In storeprocess
Productcharacteristics
Theft
Incorrect pricefile H/O
informationupdates
Unrecognisedproduct on file
title v cover
h/o informationupdate lateTitle
description/cover
mismatch
Cover price/filemismatch
printing error
W/Smisdelivery
pooraccountability
poorly labelled
confusion overrelated box(forecourt,shop save)
inadequate vanlighting
collusionbetween driver
anothercustomer/outlet
W/S mispicksover/under
W/S miscount
picks wrongtitle
pooraccountability
publisherbundle
mispackover/under
W/S mis labelfull/oddsbundle
Claim for shortsupply not
made/madelate
staffawareness
process
Booked-inagainst wrong
suppier
dual W/Ssupply
staffawareness
Booked-inagainst wrong
shop a/c
shop save/forecourt
staffawareness/
processNot booked-in/
checkedstaff training,discipline,holiday /sickness
poor stockcontrol system
Rejecteddelivery(unacceptable
condition)
Individualphysical theftin depot
In transitW/S to retail
printer/publisher/
carrier to W/S
Collusion
with consumer'sweethearting'
at back door
Fraudulentclaim of short/non delivery
SHRINK - CAUSE & EFFECTSUPPLY ISSUES (LIVE PRODUCT)
W/Sdocumentation
difficulty incheckingsupplies
procedures
Too muchproductsupplied
single delivery(not SBR)
unauthorisedtitles /excesscopy supplied
local v H/Orange disjoint
In storestockroom
display
staff
consumers
staff poor productcovermount/packaging
poor transitpackaging
misleadingtitle
other liveproduct
supplement
poor coverpositioning
price variantswith same bar
code
wrong info onfile
Display/handlingproblems
non-standardshape/size
W/S misplacepick
incorrect info.from publisher
late info. frompublisher
first time titlehas appeared
Scanninginaccuracy
use of dumpkeymissed product
inherent errorrate
in full or part
Staff coverage
lack ofinformedcontinuity
Specialaccounts
home delivery/shop saves
lack of auditproduct not
returnedLack of audit
lack ofprocedure or
facts
Robbery
poor security
cover mountremoval
abuse honestybox
parcel theft byanother
insecure backdoor area
planned oropportunist
W/S orpublisher
new title/oneshot
bar code price
Build a structure to identify,
log & relate ‘points of failure’
RETURNSISSUES
OFF-SALEPRODUCT
Wholesalerreturnsprocess
Systems/Information
Theft
Damage
Productcharacteristics
In storeprocess
Bar code
not readidentifies
wrong issue
Not collected
Bundles lost intransit
Mis-scanover/under
Bundleunidentified at
scanno label
W/S not recalltitle
Validationrejects credit
too manyreturned
too late
time windowtoo tight
wholesale tooslow to scan
W/S not supply
firm sale
product statuschange
Fraudulentclaim
Theft frommade up
returns parcel
in transitat W/S pre-
process
fromstockroomat back door
No covermount
Cover damage- no bar code
Returns note not actioned bystockroom
not received bystockroom
Returns notsent backproperly
not dispachedlost in
store, backdoor
booked outwrong a/c
Returns notesincorrectlycompleted
poor title/issueI.D
poor staffawareness
miscounted
returns notecompleted bymore than oneperson or at
different times
Staff notreturn
product /return late
promotionalpointstaff canteen
staff dump
Full bundleshort(assumed
quantity atretail-individualcopy scan at
W/Sloose product
poorlypackaged partworks
muliti supplier
Opt not toreturn
booked outwrong W/S
SHRINK - CAUSE & EFFECTRETURNS ISSUES (OFF
)
identifieswrong title(co-
wrappedsupplement)
Collusionat back door
between driver/another outlet
poorly attached
poor handling/packaging
staffawareness
proceduresand awareness
Multi-locations
customermisplaced on
display
stockroom
system error
regional/formatvariants
Non standardshape/size
makesreturningdifficult
fromstockroom Lack of audit
completionerrors
Staff coverage
weekendholiday
sickness
Lack of audit
Vouchers notsent backproperly
too latepoorly securedto wrong W/S
from wrongaccount
internaltransfer fromanother store
forecourtaccount
sub retail account
home delivery/shop save
discounting/give away to
clear
stores notreturn known
late/f/s product
1st f/s issuepartwork
off site/remotestockroom
crowdeddisplay
poor initialshelf fill/
replenishment
product fallbehind display
local weekliesset-up asdailies for
recall
unidentifiedparcel keyedafter cut off
varying timewindows
queryresolution
Stickers
manuall count
W/S
publisher
retail poorlylabel
left wrongplace
not left out
operator error
Frequency ofcollection
affects W/Sprocess time
affects 'at risk'time in shop
covermountmissing from
partwork
Stickers
singles/small RETURNSISSUES
OFF-SALEPRODUCT
Wholesalerreturnsprocess
Systems/Information
Theft
Damage
Productcharacteristics
In storeprocess
Bar code
not readidentifies
wrong issue
Not collected
Bundles lost intransit
Mis-scanover/under
Bundleunidentified at
scanno label
W/S not recalltitle
Validationrejects credit
too manyreturned
too late
time windowtoo tight
wholesale tooslow to scan
W/S not supply
firm sale
product statuschange
Fraudulentclaim
Theft frommade up
returns parcel
in transitat W/S pre-
process
fromstockroomat back door
No covermount
Cover damage- no bar code
Returns note not actioned bystockroom
not received bystockroom
Returns notsent backproperly
not dispachedlost in
store, backdoor
booked outwrong a/c
Returns notesincorrectlycompleted
poor title/issueI.D
poor staffawareness
miscounted
returns notecompleted bymore than oneperson or at
different times
Staff notreturn
product /return late
promotionalpointstaff canteen
RETURNSISSUES
OFF-SALEPRODUCT
Wholesalerreturnsprocess
Systems/Information
Theft
Damage
Productcharacteristics
In storeprocess
Bar code
not readidentifies
wrong issue
Not collected
Bundles lost intransit
Mis-scanover/under
Bundleunidentified at
scanno label
W/S not recalltitle
Validationrejects credit
too manyreturned
too late
time windowtoo tight
wholesale tooslow to scan
W/S not supply
firm sale
product statuschange
Fraudulentclaim
Theft frommade up
returns parcel
in transitat W/S pre-
process
fromstockroomat back door
No covermount
Cover damage- no bar code
Returns note not actioned bystockroom
not received bystockroom
Returns notsent backproperly
not dispachedlost in
store, backdoor
booked outwrong a/c
Returns notesincorrectlycompleted
poor title/issueI.D
poor staffawareness
miscounted
returns notecompleted bymore than oneperson or at
different times
Staff notreturn
product /return late
promotionalpointstaff canteen
staff dump
Full bundleshort(assumed
quantity atretail-individualcopy scan at
W/Sloose product
poorlypackaged partworks
muliti supplier
Opt not toreturn
booked outwrong W/S
SHRINK - CAUSE & EFFECTRETURNS ISSUES (OFF
)
identifieswrong title(co-
wrappedsupplement)
Collusionat back door
between driver/another outlet
poorly attached
poor handling/packaging
staffawareness
proceduresand awareness
Multi-locations
customermisplaced on
display
stockroom
system error
regional/formatvariants
Non standardshape/size
makesreturningdifficult
fromstockroom Lack of audit
completionerrors
Staff coverage
weekendholiday
sickness
Lack of audit
Vouchers notsent backproperly
too latepoorly securedto wrong W/S
from wrongaccount
internaltransfer fromanother store
forecourtaccount
sub retail account
home delivery/shop save
discounting/give away to
clear
stores notreturn known
late/f/s product
1st f/s issuepartwork
off site/remotestockroom
crowdeddisplay
poor initialshelf fill/
replenishment
product fallbehind display
local weekliesset-up asdailies for
recall
unidentifiedparcel keyedafter cut off
varying timewindows
staff dump
Full bundleshort(assumed
quantity atretail-individualcopy scan at
W/Sloose product
poorlypackaged partworks
muliti supplier
Opt not toreturn
booked outwrong W/S
SHRINK - CAUSE & EFFECTRETURNS ISSUES (OFF
)
identifieswrong title(co-
wrappedsupplement)
Collusionat back door
between driver/another outlet
poorly attached
poor handling/packaging
staffawareness
proceduresand awareness
Multi-locations
customermisplaced on
display
stockroom
system error
regional/formatvariants
Non standardshape/size
makesreturningdifficult
fromstockroom Lack of audit
completionerrors
Staff coverage
weekendholiday
sickness
Lack of audit
Vouchers notsent backproperly
too latepoorly securedto wrong W/S
from wrongaccount
internaltransfer fromanother store
forecourtaccount
sub retail account
home delivery/shop save
discounting/give away to
clear
stores notreturn known
late/f/s product
1st f/s issuepartwork
off site/remotestockroom
crowdeddisplay
poor initialshelf fill/
replenishment
product fallbehind display
local weekliesset-up asdailies for
recall
unidentifiedparcel keyedafter cut off
varying timewindows
queryresolution
Stickers
manuall count
W/S
publisher
retail poorlylabel
left wrongplace
not left out
operator error
Frequency ofcollection
affects W/Sprocess time
affects 'at risk'time in shop
covermountmissing from
partwork
Stickers
singles/small
LIVE SUPPLY ISSUES RETURNS ISSUES
Prioritising Hot Spots & Quick Wins
Score Time / Effort to Address (A)5 Can do easiliy & cheaply / Weeks4 Needs some effort but little cost / Quarter3 Minor systems & protocol effort2 Requires development over months1 Major systems & Commercial issues
Score Severity of Failure (S) Probability of Occurance (P)5 Major Loss Impact Daily / Inevitable4 Some Loss Impact Weekly / Repetitive3 Individual Item Loss Every few weeks / Occasional2 Possible / Uncertain Loss Every few months / Rare1 Little Impact Rare & Irregular
Severity x Probability = Focus Factor Focus x Addressability = Quick Win Factor
Objective Priorities Hot Spots Quick Wins
Objective build up as a team .. Scoring .. Reviewing .. Etc
Mutual, logical view .. As part of Big Picture
Small steering group Manage specific work parcels Firm, objective co-ordination Rigorous & robust
Product Identification
Supply Management
In-store processes
Key Areas
Credit Claims Period
Product Identification
Supply Management
In-store processes
Key Areas
Credit Claims Period
Industry From Analysis to Actions
Leads To 4 Key Action Areas
Credit Claims: New ‘synchronised’ period Benefit ~ €3m p.a. to Retail from July 2003 .. -23% Audited … Hard wired … Sustainable Step Change
Key Achievements to Date
Publisher Notification FormDate 04-Mar-04Publisher SeymourTitle on Calendar Disney & Me specialTitle apparent on magazine
Finding Nemo
Issue Finding NemoOn Sale - 27-Feb-04Recall 09-Apr-04Price £1.99Barcode 977146959500002
Product Identification: Error Reporting Measure .. report .. inform .. educate Web based ‘National Title File’ www.nationaltitlefile.co.uk
Supply Management: Sales Based Replenishment Modelling & pilots .. lead to Best Practice Guide Menzies Test .. 6 depots, 218 customers, 100 titles Benefit .. Sales +2.6 %, Returns -51%
Key Achievements To Date
In Store Process: Best Practice Simple guide produced to benefit all retailers “3 Areas where Shrink eats away your profits” “If you do nothing else .. Do This” “Golden Copies!”
ECR .. Leads toJoint Sainsbury’s-Menzies ActionSainsbury's & Menzies Shared common Roadmap approach
Address holistically .. Big Picture .. Not Knee Jerks Resource jointly .. Sainsburys team + Shrink Doctor Leverage from Industry work
A clear joint Brief Aim for understanding and sustainable actions Target ‘Hot’ stores Map .. Benchmark .. Quick Wins
Dual Supply
Stock Holding
Stocktake
Theft \ Security
Poor Data Management
Returns Process
Colleague Issues
Sainsbury’s Issue Identification
Key Issues
Procedure & Training
Processes
Management Information
Mapping, Analysis & Risk Assessment points to
Actions & AchievementsProcedure & Training Introduced a supplier funded Colleague handbook Built Wholesale relationship & Raised our Internal profile
Process ‘Invoice Matching’ .. More robust store charging system Simple & more robust stocktaking process
Information Produce timely Management information throughout estate Wholesale data feed of “rejected” returns
Shrinkage down 25% .. Sales up 10% .. At Pilot stores
Key LearningsSainsbury’s-Menzies
Collaboration Got stuck in .. Dug out the facts .. Learned from the front line
Whole new meaning to the word “observe” .. Objective appraisal
Did it for real bottom up, In detail .. Identified the basics
Knee Jerks – Only deliver short term results
Sustainability .. Comes from End to End process understanding
Retailers / Wholesalers encouraged to do more
There are NO short cuts!
Key LearningsIndustry Collaboration
Industry-wide Collaboration can be done .. But it’s a Journey!
Requires clear systematic focus .. And the right people Blue Book .. supported move from Subjectivity to Objectivity You CAN move from ‘Them & Us’ to … ‘US!’ Technical analysis .. & .. ‘People’ issues Its about Solving! .. Not shifting! Within the Big Picture .. for Sustainability
The journey continues .. We are still walking & talking together
Measuring Stock Loss:Measuring Stock Loss:Developing a KPIDeveloping a KPI
Dr Paul Chapman
Cranfield School of Management
Issues to Consider
• A clear definition of “Stock Loss”
• The scope of the issue
• Method of calculation
• Methods of valuation
• Focused management action
A Clear Definition of “Stock Loss”?
• Internal theft + external theft + process failure (including waste) + inter-company fraud
• All inputs that cannot be accounted for
The Scope of the Issue
• Holistic, supply chain view:– raw material to shopper, e.g. the cow to the fridge, including
returns
• Being practical:– Limit the start of the supply chain to either:
• Declared production in the factory• Product in manufacturer’s DC
– Limit end point in the supply chain to either:• The shelf• The checkout
Method of Calculation
• Total Stock loss = Known loss + unknown loss– Discrepancy between book stock and physical stock– Net inventory + net movements– (opening stock – closing stock) + ((purchases + incoming
transfers) – (sales + outgoing transfers))
• Where known loss:= Known theft processed + Known errors processed(including: write offs; damage; donations; mark downs; cost of sales
adjustments; out-of-date; tasting)
Categories Included
0
25
50
75
100
Pe
rce
nt
Store issuesSupply chain
• Value of loss calculated at either:– Sales value
• Gross including VAT • Net excluding VAT
– Purchase price– Transfer price
Methods of Valuation
Total stock lossSales
X 100%
• Loss as a percentage of sales
0
5
10
15
20
25
30
35
40
45
Pe
r c
en
t
Retail SalesValue
Cost Price Cost Price + Other
Method Used
To Conclude: Deliver Focussed Action
• Use your data– Top level KPI reveals total opportunity– Cascade measure to expose under performance
• Know how to take action– The ECR Roadmap
• Dedicate the capacity to implement
• Drive progress against targets
Makro & Gillette: on track with Makro & Gillette: on track with the ECR Shrinkage Roadmapthe ECR Shrinkage Roadmap
Werner Cooreman, Makro
Dieter Mertens, Gillette
Programme
• Profiles
• Collaborative objectives
• Phase 1: defensive
• Phase 2: innovative
• Phase 3: the ECR shrinkage roadmap
• Take away
Profiles: the retailer - the supplier
> 1,2 billion €
> 70.000 SKU
> 3.600 employees
> 1 million customers
Collaborative objectives
Evolution of Objectives through phases of improving collaboration
Less Shrink
Less Shrink + more sales
better performance
mid 2002
mid 2003 2004
Phase 1: defensive
• PHASE 1:– Makro Call– Shoplifting– Safercases
ResultsShrink: - 80% (approx.)
Phase 2: Innovative
• PHASE 2:– Gillette Call– Shoplifting + Back office – Clamshell C&C pack
ResultsShrink: stable at 0.2%
Sales: + 131% (pilot test)
Phase 3:Using the Roadmap
• PHASE 3:– Full Collaboration– Holistic approach– Store supply chain solution
ResultsShrink: - 20% (Q1); ongoing...Sales : + 18% (Q1); ongoing...
Phase 3:Using the Roadmap
0. Wake Up
2. Map &Measure
4. Develop Solutions
5. Implement
6. Evaluate
1. Plan
3. Analyse
Illustration Road Map by video
Phase 3:Using the Roadmap
Plan
SHRINKAGE SALES
- 10 % + 20%
October 2003 October 2004
Mach3 family
Map & Measure
-2000,00
-1500,00
-1000,00
-500,00
0,00
1
GILLETTE CONTOUR PLUS 10 MESJ ES GILLETTE GII 10 MESJ ES GILLETTE GIIPLUS 10 MESJ ES GILLETTE MACH 3 12MESJ ES
GILLETTE MACH 3 4MESJ ES GILLETTE MACH 3 APPARAAT GILLETTE MACH 3 APPARAAT COOLBLUE GILLETTE SENSOR 10 MESJ ES
GILLETTE SENSOR EXCEL APPARAAT GILLETTE SUP.SILVER 10 MESJ ES
Focus on Mach3 Family (12 pack & 4 pack)
1. Camion komttoe aan de V
2. Chauffeurbiedt pakbon in2 ex aan loket
aan
3.Ordercontrolein BORIS door
bediende
4. Leveringkrijgt GOnummer
5. Chauffeurkrijgt pakbonmet stickervoor 'Makro'
terug
Exemplaar metsticker voor
leverancier gaatin bakje
6. Chauffeurontlaadt pallet(geen zegel)
7. Chauffeurbiedt pallet aanbij ontvanger
8. Ontvangervoert 1e
Controle uit
Indien leveringklopt, worden
de docgewisseld door
ontvanger
8A. Controleerthet document
8B.Telt hetaantal
eenheden/collivermeld op bon
8C.Vergelijkt ditaantal met
paklijst9. Chauffeurvoert door naar
transitruimte
NAAR 2eCONTROLE
MAKRO - GILLETTEPILOT FMEA FOOD
DEURNE
PROCES FLOW CHART
1. ONTVANGST
AnalysisProcess Map
Process Map
Root causes analysis Failure Mode & Effect Analysis
Possible Solutions
Gillette 10 step process
Implementation
4.check delivery
1.secure storage
5.visible location
3.fast tracking to secure area
Implementation
6.Anti-theft fixtures
9.staff awareness
7.frequent replenishment
8.regular counting
Evaluation
• Overall preliminary results:
Shrink (3 phases): - 85%
Sales (3 phases): + 18%
• Positive acceptance on the workfloor • Roll out solutions (10 Steps) in other stores• Final evaluation due October 2004
Take away
• Use of the roadmap requires commitment
• Loss prevention is about simple issues: stock control, identifying opportunities,…but with great impact
• Collaboration works
Thank you for your attention !
Wrap upWrap up
John Fonteijn
Royal Ahold
Co-chair, Shrinkage Working Group
An Invitation ...
• Join our working group
• Use the Road Map
• Share your results
ECR Shrinkage Award
• To the person / organisation that has made the most significant contribution to shrinkage reduction in 2004 – 5.
• Judging criteria:– Approach– Results– Dissemination– Sustainability
Thank you
Q&A
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