2 July 2015

Transport SIG – July 2015

Paul Dickson

Supply Chain Collaboration

in SA FMCG Supply Chains

2

Agenda

Introduction

Supply Chain Collaboration: An introduction and definition

What problem are we trying to solve?

Collaboration and Integrated Demand Planning

Supply Chain Collaboration in developed markets

What is being done locally?

2 July 2015

32 July 2015

IntroductionSome initial context as to this presentation

• What is Supply Chain Collaboration?

• What benefit is targeted through better supply chain collaboration and

integrated planning?

• What do we commonly see when FMCG partners are not effectively

collaborating?

• What is happening in the first world FMCG market, and what are we

observing locally?

4

IntroductionWhat is “Supply Chain Collaboration”, and what does it really mean?

“Collaboration is... a recursive process where two or more people or organizations work

together to realize shared goals” - (Wikipedia.org)

“Supply Chain Collaboration is the process of integrating supply chain planning and

execution activities across multiple trade partners, with the objective of creating optimal

and cost-effective logistics and inventory operations across all parties.” - Resolve

“Collaborative Planning, Forecasting and Replenishment (CPFR) is a business

model that takes a holistic approach to supply chain management and combines the

intelligence of multiple trading partners in planning and fulfilling customer demand…

CFPR links sales and marketing best practices – category management, supply chain

planning and execution processes to increase availability while reducing inventory,

merchandizing, transportation and logistics costs.” – Voluntary Inter-industry Commerce

Standards) (VICS) Association

52 July 2015

Supply Chain CollaborationWhat are the different “generic” components and activities in SC Collaboration?

Integration

Visibility

Orchestration

Copyright 2005

6

2 July 2015

So where do we start? A Problem observationA view on market challenges in FMCG

• Service levels are

still under pressure

• Inventory levels are

not optimal

• Although retailers

and suppliers do

collaborative

planning, this is not

effectively executed

Collaborative

demand planning in

FMCG remains

constrained

• Increased retailer

centralisation has

created service

issues

• Disconnect between

internal parties, such

as buying and

operations

• Disconnect between

suppliers, retailers

and transporters

There have been a

number of realities

in the South African

FMCG market,

which contribute to

supply chain

inefficiencies

• Parties operated in a

reactive manner

• Service levels suffer

• On-shelf availability

suffers

• Promotions are

occasionally

ineffective

The end result?

72 July 2015

Integrated Demand PlanningA natural starting point to collaborative operations

Retail DC

Suppliers

Demand/

Supply

Matching

MPS

Demand/

Supply

Matching

Demand

Translation

Sourcing

Demand/

Supply

Matching

Trade

Patterns

Inventory/Transport

Netting & Policies

Demand/

Supply

Matching

Traditional Forecasting

Forecast Accuracy:60% +Traditional Forecasting

Forecast Accuracy:30% +

Stores / eCommerce

Fulfillment

CenterCPG Factory

CPG DC

Sales/Inv BOH

Update

Inventory/Transport

Netting & Policies

Inventory/Transport

Netting & Policies

CPG DC

Consumer Direct

Inventory/Transport

Netting & Policies

Transport and Logistics Providers are a vital partner to this collaboration

environment, and need to be part of the integrated planning team!

82 July 2015

A view on first world FMCG collaborationAn example of collaboration maturity abroad, through the eyes of a collaborative platform

GROCERY CONSUMER GOODS ON ONE

3 OUT OF TOP 5U.S. GROCERY RETAILERS

I N O N E N E T W O R K

ONE NETWORK SCOPE

60k+ COMPANIES

IN ONENETWORK

LOGISTICS TRANSACTIONS MANAGED IN ONE

TRANSACTION FLOW VIA ONE NETWORK

1.3M PER DAY

55k PER HOUR

15 PER SECOND

ORDERS INVOICES APPTS. SHIPMENTS

TRANSACTIONS 52 M+

CONNECTED

E X E C U T I N G

TOP 2 AUTO OEMLARGEST HI-TECH SUPPLIER

COMMUNITY

2 OUT OF 3 LARGEST GLOBAL

DEFENSE CONTRACTORS

480 M TRANSACTIONS

92 July 2015

The state of collaboration in SA FMCGWhat is progressing locally in collaborative planning

• Local retailers and suppliers do collaborative planning interventions, but this is generally on the strategic/long-term level (promotional and new product planning etc.)

• Logistics service providers are rarely seen as “strategic partners”, and are not typically involved in collaboration initiatives.

• There are a number of barriers to the evolution of optimal collaboration:

However, things are changing!! Local players are starting to realise a benefit to adopting better and more integrated planning processes with

partners

IT Systems and Data

Historical and cultural differences

Operational and process alignments

102 July 2015

Conclusion & Questions

www.resolvesp.com

pdickson@resolvesp.com

47 Landmarks Ave, Samrand

076 573 8096

resolvesp

@resolve_sp