Scorecard ECR Europe Forum '05. Use the ECR scorecard to benchmark and improve your performance. Presentation By Ecr South Africa

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South Africa – Scorecard in action

August IwańskiChief Executive - CGCSA

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1st October 2002

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Mission

To enable retailers, wholesalers, manufacturers, logistics and service providers in the South African Consumer Packaged Goods industry to WORK TOGETHER to meet consumer needs better, faster, and at least cost.

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Vision

“The voice, adding value”

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Co-Chairs:

Directors:

Board

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Key activities

Supply and Demand Chain efficiencies – under the banner of ECR

Crime Prevention Programme Global Standards including data

synchronisation and catalogue (PDC.za) Legal and Regulatory (non-competitive

issues including Food Safety)

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Objectives

Best practice processes To develop and promote best practice processes for joint

demand and supply management projects. EAN●UCC standards endorsed by GCI

To support and disseminate the adoption of identification and communication standards i.e. the Enablers and Integrators (as agreed through EAN●UCC and endorsed by the GCI) which enhance inter-company logistics and increase efficiencies for trading partners.

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Objectives (cont. 1)

Industry research and education To improve market understanding of member

companies through industry research and education.

A voice for the industry To provide a voice for the industry to government

and other key bodies on all relevant industry, legal & regulatory affairs.

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Underlying principles

Focus on the consumerA commitment to the belief that sustained business success stems only from providing consumers with products and services that consistently meet or surpass their demands and expectations.

Working Together The greatest consumer value can be offered only when organisations work together, both internally and with their trading partners, to overcome barriers that erode efficiency and effectiveness.

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South African FMCG Value Chain Analysis (VCA)

First study commissioned in 1999 To determine the potential cost savings in the SA FMCG

Industry 11 Manufacturers and 6 Wholesale / Retail participants Key Results

• Manufacturers were ahead of retailers• R2.55 billion potential saving for consumers• R5.1 billion potential saving in a once off inventory reduction

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South African FMCG Value Chain Analysis (VCA) (cont. 1)

In 2004 a new study was commissioned To measure progress of ECR implementation in

the SA FMCG Industry To Identify opportunities for further improvement 22 Manufacturers & 6 Retailers/Wholesalers

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VCA Project - Purpose

Snapshot - Determine the degree of implementation, Trend - Identify whether there has been progress

since the 1999 study Industry - Identify opportunities for industry initiatives

to implement improvements Benchmark - Allow participating organizations to

benchmark themselves against the SA FMCG industry, as well as run global benchmarks

Action - Help participants identify opportunities and improvement potentials and specific action steps

Trigger - Deliver a trigger for the SA industry to start talking TO rather than AT one another

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Working together22 Manufacturers, 6 Retailers

National Brands

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Sample Composition22 Manufacturers, 6 Retailers/Wholesalers

Participant Composition

NB: Some participants have filled in more than one scorecard, as they scored for several categories.

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Survey Findings – Key Performance Indicators

The Supply Chain is neither lean nor efficient 17 days more inventory in the SA Supply Chain

than the global Averages Case fill / service level is inadequate:

• Averages On time delivery: Manufacturers 90.2% vs. retailers 87.3%, which means that 10-12% of deliveries are late

Unnecessary frictions in order cycle & sorting out problems

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Survey Findings – Key Performance Indicators (cont. 1)

Retailer DCs seem to not yet have yielded the expected benefits Similar store inventory levels for DSD and DC replenished operations

Supply Chain as a whole is not very responsive Long lead times / replenishment cycles, NDDs Average level out-of-stock on shelf is between 9 and 10%

Supply Chain operates in a traditional push approach Despite pledges towards collaboration current business practices

between retailers and manufacturers remain predominantly “push” and deal driven

Performance measuring is not standardized or a regular practice The South African FMCG industry needs to operationally a standard

set of performance measures which is continuously monitored, reviewed and acted upon

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KPIs - Averages

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1999 – 2004 – 2007 Total ECR

1999 2004 20070%

10%

20%

30%

40%

50%

60%

70%

80%

ManufacturersRetailers

(target)

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1999 – 2004 – 2007 Total ECR (cont. 1)

Since 1999 survey – ECR-SA implementation shows moderate progress.

Retailers embracing ECR principles slightly more than manufacturers, both parties are virtually on par on overall ECR score.

Participants have indicated that over the next three years they want to get from a piloting stage to the point where the roll out of ECR principles is starting to yield real benefits to the business.

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2005 Action Steps

CGCSA Board agreed to focus on 4 projects identified from the VCA Analysis:1. On Shelf Availability2. Standardized Industry Key Performance

Indicators3. Category Management Methodologies4. Training and Skills Development

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Lessons Learned

Understanding of the principles depicted on the scorecard is critical

CEO Commitment essential Cross-functional team - directors and senior

management attendance at the workshop is essential

Choose the right partner/facilitator Adequate time is given for the completion of KPI’s Three workshops per company must be held

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Lessons Learned (cont. 1)

Enough time must be allocated after the workshops to re-visit participating companies to review data before presenting

Do not compare against your local competitor – benchmark against global

Less is more Regular feedback Conduct the survey at least every 4-5 years to

monitor progress and keep top of mind

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Finally, to conclude

Just do it!

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The end

Thank you