Inventory Reduction Project - ECR Indonesia 2003

Inventory ReductionInventory Reduction ECR Annual Conference ECR Annual Conference

February 2003February 2003

Inventory ReductionInventory Reduction ECR Annual Conference ECR Annual Conference

February 2003February 2003

Budianto Hariadi – P&G Logistics ManagerBudianto Hariadi – P&G Logistics Manager

Theo Maulana – Toserba Yogya Non Food MD Theo Maulana – Toserba Yogya Non Food MD

Budianto Hariadi – P&G Logistics ManagerBudianto Hariadi – P&G Logistics Manager

Theo Maulana – Toserba Yogya Non Food MD Theo Maulana – Toserba Yogya Non Food MD

OutlineOutlineOutlineOutline

IntroductionIntroduction

SituationSituation

ObjectiveObjective

Managing The ChangeManaging The Change

Result – ToolResult – Tool

Key LearningKey Learning

IntroductionIntroduction

SituationSituation

ObjectiveObjective

Managing The ChangeManaging The Change

Result – ToolResult – Tool

Key LearningKey Learning

Established since 1873 at Cincinnati, Ohio, Established since 1873 at Cincinnati, Ohio, US, in Consumer Good industry with US, in Consumer Good industry with current annual sales of $ 40+ billion. current annual sales of $ 40+ billion.

P&G Indonesia established in 1989. P&G Indonesia established in 1989. Distribute Vicks Health Care product line, Distribute Vicks Health Care product line, Pantene, Head & Shoulder, Rejoice, Pantene, Head & Shoulder, Rejoice, Ascend, Oil of Olay, Pampers, Whisper and Ascend, Oil of Olay, Pampers, Whisper and Pringles.Pringles.

Company Mission: Company Mission: Touching Lives, Improving Life.Touching Lives, Improving Life.

Established since 1873 at Cincinnati, Ohio, Established since 1873 at Cincinnati, Ohio, US, in Consumer Good industry with US, in Consumer Good industry with current annual sales of $ 40+ billion. current annual sales of $ 40+ billion.

P&G Indonesia established in 1989. P&G Indonesia established in 1989. Distribute Vicks Health Care product line, Distribute Vicks Health Care product line, Pantene, Head & Shoulder, Rejoice, Pantene, Head & Shoulder, Rejoice, Ascend, Oil of Olay, Pampers, Whisper and Ascend, Oil of Olay, Pampers, Whisper and Pringles.Pringles.

Company Mission: Company Mission: Touching Lives, Improving Life.Touching Lives, Improving Life.

Insert customer facilities picture here.Insert customer facilities picture here. Shelf Shelf StoreStore WarehouseWarehouse

Insert customer facilities picture here.Insert customer facilities picture here. Shelf Shelf StoreStore WarehouseWarehouseGriya Buah BatuGriya Buah Batu

Yogya Sunda Yogya Sunda

Yogya BIPYogya BIP

Yogya KepatihanYogya Kepatihan

SituationSituationSituationSituation

Buy more for Out-of-Stock. Quick decision for urgent, often not data-based. Inventory not regularly reviewed. P&G – Yogya together drive sales. (Sales-oriented) P&G not regularly review inventory. P&G acted upon OOS only. P&G had high Service Level.

Buy more for Out-of-Stock. Quick decision for urgent, often not data-based. Inventory not regularly reviewed. P&G – Yogya together drive sales. (Sales-oriented) P&G not regularly review inventory. P&G acted upon OOS only. P&G had high Service Level.

95% 52

50%

60%

70%

80%

90%

100%

Service Level Inventory

0

10

20

30

40

50

60

Days

ObjectiveObjectiveObjectiveObjective

Reduce inventory to increase cash-available at Reduce inventory to increase cash-available at Yogya without impact to store service level.Yogya without impact to store service level.

Reduce inventory to increase cash-available at Reduce inventory to increase cash-available at Yogya without impact to store service level.Yogya without impact to store service level.

650 million

rp.

650 million

rp.

Project TeamProject TeamProject TeamProject Team

Budianto Hariadi – Logistics Manager, P&G Budianto Hariadi – Logistics Manager, P&G Eric Tendean – Account Manager, P&GEric Tendean – Account Manager, P&G

Shumit Kapoor – MR Channel Leader, P&GShumit Kapoor – MR Channel Leader, P&GCeejay Bate – Logistics Manager, P&GCeejay Bate – Logistics Manager, P&G

Budianto Hariadi – Logistics Manager, P&G Budianto Hariadi – Logistics Manager, P&G Eric Tendean – Account Manager, P&GEric Tendean – Account Manager, P&G

Shumit Kapoor – MR Channel Leader, P&GShumit Kapoor – MR Channel Leader, P&GCeejay Bate – Logistics Manager, P&GCeejay Bate – Logistics Manager, P&G

Theo Maulana – Non Food MD, Yogya Theo Maulana – Non Food MD, Yogya Gunawan T. – Non Food MD Sub Head, Yogya Gunawan T. – Non Food MD Sub Head, Yogya Lucia Linda Edi – Non Food MD Manager, Yogya Lucia Linda Edi – Non Food MD Manager, Yogya Widjaja Tjandra – MD Director, Yogya Widjaja Tjandra – MD Director, Yogya Dede Martono – DC Manager, Yogya Dede Martono – DC Manager, Yogya Riana – Kepatihan Store Buyer, Yogya Riana – Kepatihan Store Buyer, Yogya Susana – BIP Store Buyer, Yogya Susana – BIP Store Buyer, Yogya Chi Yu – Buah Batu Store Buyer, YogyaChi Yu – Buah Batu Store Buyer, YogyaLeony – Sunda Store Buyer, YogyaLeony – Sunda Store Buyer, Yogya

Theo Maulana – Non Food MD, Yogya Theo Maulana – Non Food MD, Yogya Gunawan T. – Non Food MD Sub Head, Yogya Gunawan T. – Non Food MD Sub Head, Yogya Lucia Linda Edi – Non Food MD Manager, Yogya Lucia Linda Edi – Non Food MD Manager, Yogya Widjaja Tjandra – MD Director, Yogya Widjaja Tjandra – MD Director, Yogya Dede Martono – DC Manager, Yogya Dede Martono – DC Manager, Yogya Riana – Kepatihan Store Buyer, Yogya Riana – Kepatihan Store Buyer, Yogya Susana – BIP Store Buyer, Yogya Susana – BIP Store Buyer, Yogya Chi Yu – Buah Batu Store Buyer, YogyaChi Yu – Buah Batu Store Buyer, YogyaLeony – Sunda Store Buyer, YogyaLeony – Sunda Store Buyer, Yogya

Managing The ChangeManaging The ChangeManaging The ChangeManaging The Change

1.1. Assess The Supply ChainAssess The Supply Chain from service level, from service level, schedules, target inventory.schedules, target inventory.

2.2. Identify major cause of excess inventoryIdentify major cause of excess inventory

3.3. Implement corrective actionsImplement corrective actions

4.4. Track progress on Inventory and Service Level.Track progress on Inventory and Service Level.

1.1. Assess The Supply ChainAssess The Supply Chain from service level, from service level, schedules, target inventory.schedules, target inventory.

2.2. Identify major cause of excess inventoryIdentify major cause of excess inventory

3.3. Implement corrective actionsImplement corrective actions

4.4. Track progress on Inventory and Service Level.Track progress on Inventory and Service Level.

Major Causes & Corrective ActionsMajor Causes & Corrective ActionsMajor Causes & Corrective ActionsMajor Causes & Corrective Actions

From:

Traditional buyer-seller relationship Sales-oriented

Buy more reaction for stockouts.P&G acted on stockouts onlyP&G had high Service Level

Traditional Inventory ControlTotal inventory evaluation

Manual Ordering Process Judgmental order generation

To:To:

Supply Chain thinkingSupply Chain thinkingProfit-orientedProfit-orientedOfftake based orderOfftake based orderP&G acted on stockouts & excess inventoryP&G acted on stockouts & excess inventoryP&G had high service level, reduce safety P&G had high service level, reduce safety inventoryinventory

Inventory ManagementInventory ManagementBreakdown into types of inventory: cycle Breakdown into types of inventory: cycle inventory, in transit inventory, seasonal/ inventory, in transit inventory, seasonal/ promotional inventory, safety inventory.promotional inventory, safety inventory.

Offtake Based OrderingOfftake Based OrderingOrder generation using built-in formulaOrder generation using built-in formula

Project Schedule Project Schedule Project Schedule Project Schedule

Project start to finish was only Project start to finish was only 93 days93 days.. Getting commitment up-front is key. Getting commitment up-front is key. Clear objectives, actionable and structured next Clear objectives, actionable and structured next

steps. steps.

Project start to finish was only Project start to finish was only 93 days93 days.. Getting commitment up-front is key. Getting commitment up-front is key. Clear objectives, actionable and structured next Clear objectives, actionable and structured next

steps. steps.

Inventory ReductionInventory ReductionInventory ReductionInventory Reduction

AreaArea Major Action Major Action BaseBase GoalGoal ActualActual ReductReduct

ionion

MM rp.MM rp. MM rp.MM rp. MM rp.MM rp. %%

StoreStore Offtake-based orderOfftake-based order

323323 169169 219219 32%32%

DCDC

Offtake-based purchase Offtake-based purchase order order

Synchronize deliveriesSynchronize deliveries 11281128 633633 372372 67%67%

TotalTotal14511451 802802 591591 59%59%

% Out-of-Stock% Out-of-Stock5.0%5.0% 5.0%5.0% 3.5%3.5% 1.5%1.5%

Inventory & Service LevelInventory & Service LevelInventory & Service LevelInventory & Service Level

Check pointCheck point

The tool: offtake based order The tool: offtake based order The tool: offtake based order The tool: offtake based order

INPUT DATAINPUT DATA Sales dataSales data Lead Time + Order Lead Time + Order

CycleCycle Promotional Promotional Actual InventoryActual Inventory Exception / OverwriteException / Overwrite

INPUT DATAINPUT DATA Sales dataSales data Lead Time + Order Lead Time + Order

CycleCycle Promotional Promotional Actual InventoryActual Inventory Exception / OverwriteException / Overwrite

CHECK POINTCHECK POINT # Items Overstock# Items Overstock # Items Out-of-Stock# Items Out-of-Stock Inventory DaysInventory Days Perpetual controlPerpetual control

CHECK POINTCHECK POINT # Items Overstock# Items Overstock # Items Out-of-Stock# Items Out-of-Stock Inventory DaysInventory Days Perpetual controlPerpetual control

An excel spreadsheet to support inventory decision, whether to replenish An excel spreadsheet to support inventory decision, whether to replenish the product or not.the product or not.

The toolThe toolThe toolThe tool

INVENTORYCONTROL

SHEET

DAILY SELL OUT

STOCK

INV

EN

TO

RY

TA

RG

ET

PR

OM

OTIO

NOR

A

LO

CA

TIO

N

PURCHASEORDER

The toolThe toolThe toolThe tool

INVENTORY CONTROL SHEET BUAH BATUTanggal Order: 2/2 ORDER CYCLE : 7 # Item Out of Stock : 9

Tanggal Penerimaan Barang: 2/7 LEAD TIME : 5 # Item Overstock : 10

Lokasi Inventory (Nama Store/Gudang):

ICO Days (A) : 12 Target Max. Stock : 30 Actual Stock : 18

No. Item Code Item Description Case Pack

Daily Sell Out (pcs)

Promo/ Forecast

(%)

ICO(pcs)

Ending Stock (pcs)

Suggest Order(crt)

Final Order (crt)

Stock: Before Order (days)

Stock: After Order(days)

Last Week Stock (days)

Note

1 4500377 ASCEND CLEAR SHPO 100 ML 48 1.5 0% 18 0 0 1 0 31 100 OVERSTOCK2 4500117 ASCEND CLEAR SHPO 200 ML 24 0.5 0% 6 60 0 0 120 120 64 OVERSTOCK3 4500155 ASCEND CLEAR SHPO 7.5 ML 64 6.1 0% 73 64 0 0 11 11 64 4 4510147 ASCEND LEAVE ON 180 ML 12 1.3 0% 15 5 1 0 4 4 12 5 4510338 ASCEND LEAVE ON 50 ML (48) 48 1.6 0% 20 0 0 1 0 29 13 6 4510208 ASCEND LEAVE ON 7.5 ML (384)64 6.8 0% 81 60 0 0 9 9 64 7 4510345 ASCEND LEAVE ON INTENSIVE 50 ML (48)48 1.3 0% 16 0 0 0 0 0 0 8 4510321 ASCEND LEAVE-ON INT. 180 ML12 0.9 0% 10 4 1 0 5 5 10 9 4510154 ASCEND RINSE OFF NORMAL 100 ML (48)48 0.7 0% 8 1 0 0 2 20 9 10 4510161 ASCEND RINSE OFF NORMAL 200 ML (24)24 0.2 0% 2 0 0 0 0 0 0 11 4510215 ASCEND RINSE OFF NORMAL 7.5 ML (384)36 3.4 0% 41 50 0 0 15 15 50 12 4410867 FORMULA 44 120 ML (6'SX8) 6 0.2 25% 3 5 0 0 20 20 6 13 4410843 FORMULA 44 30ML (6'SX18) 6 0.5 25% 8 2 1 0 3 3 12

SORT BY INV.

EXTRACT

SORT BY ITEM DESC SORT BY ITEM CODEINVENTORY CONTROL SHEET BUAH BATU

Tanggal Order: 2/2 ORDER CYCLE : 7 # Item Out of Stock : 9

Tanggal Penerimaan Barang: 2/7 LEAD TIME : 5 # Item Overstock : 10

Lokasi Inventory (Nama Store/Gudang):

ICO Days (A) : 12 Target Max. Stock : 30 Actual Stock : 18

No. Item Code Item Description Case Pack

Daily Sell Out (pcs)

Promo/ Forecast

(%)

ICO(pcs)

Ending Stock (pcs)

Suggest Order(crt)

Final Order (crt)

Stock: Before Order (days)

Stock: After Order(days)

Last Week Stock (days)

Note

1 4500377 ASCEND CLEAR SHPO 100 ML 48 1.5 0% 18 0 0 1 0 31 100 OVERSTOCK2 4500117 ASCEND CLEAR SHPO 200 ML 24 0.5 0% 6 60 0 0 120 120 64 OVERSTOCK3 4500155 ASCEND CLEAR SHPO 7.5 ML 64 6.1 0% 73 64 0 0 11 11 64 4 4510147 ASCEND LEAVE ON 180 ML 12 1.3 0% 15 5 1 0 4 4 12 5 4510338 ASCEND LEAVE ON 50 ML (48) 48 1.6 0% 20 0 0 1 0 29 13 6 4510208 ASCEND LEAVE ON 7.5 ML (384)64 6.8 0% 81 60 0 0 9 9 64 7 4510345 ASCEND LEAVE ON INTENSIVE 50 ML (48)48 1.3 0% 16 0 0 0 0 0 0 8 4510321 ASCEND LEAVE-ON INT. 180 ML12 0.9 0% 10 4 1 0 5 5 10 9 4510154 ASCEND RINSE OFF NORMAL 100 ML (48)48 0.7 0% 8 1 0 0 2 20 9 10 4510161 ASCEND RINSE OFF NORMAL 200 ML (24)24 0.2 0% 2 0 0 0 0 0 0 11 4510215 ASCEND RINSE OFF NORMAL 7.5 ML (384)36 3.4 0% 41 50 0 0 15 15 50 12 4410867 FORMULA 44 120 ML (6'SX8) 6 0.2 25% 3 5 0 0 20 20 6 13 4410843 FORMULA 44 30ML (6'SX18) 6 0.5 25% 8 2 1 0 3 3 12

SORT BY INV.

EXTRACT

SORT BY ITEM DESC SORT BY ITEM CODE

Menu: Sort by item desc.Sort by item codeSort by Inventory

Key LearningKey LearningKey LearningKey Learning

Paradigm shift on the relationships of inventory and service Paradigm shift on the relationships of inventory and service level. level.

Know clearly where we are now and where we want to be. Know clearly where we are now and where we want to be.

Improving the flow of information reduce the inventory.Improving the flow of information reduce the inventory.

Multi-dimensional approach; process, system, people.Multi-dimensional approach; process, system, people.

Collaboration relationship is critical.Collaboration relationship is critical.

Paradigm shift on the relationships of inventory and service Paradigm shift on the relationships of inventory and service level. level.

Know clearly where we are now and where we want to be. Know clearly where we are now and where we want to be.

Improving the flow of information reduce the inventory.Improving the flow of information reduce the inventory.

Multi-dimensional approach; process, system, people.Multi-dimensional approach; process, system, people.

Collaboration relationship is critical.Collaboration relationship is critical.