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
47 Landmarks Ave, Samrand
076 573 8096
resolvesp
@resolve_sp