© IG&H Consulting & Interim

Value Chain Excellence in Retail

IG&H perspective on making the value chain really work

Wassenaar, June 1st 2010

© IG&H Consulting & Interim, Woerden – The Netherlands 2010 Elsevier Retail Summit 2010 2

IG&H survey: “Value Chain Mirror” helps retailers making their value chains really work

Value Chain Mirror

Brand

Retailer

ShopShop Shop

SupplierSupplierSupplier

Shop Shop

In-season

Management

Supply Chain

Mgmt

Category

Mgmt

VC

Pa

rtn

ers

-M

irro

rV

C C

ap

ab

ilit

ies

-M

irro

r

First year pilot - Fashion Industry

Scoping - Retail Consumer industry

© IG&H Consulting & Interim, Woerden – The Netherlands 2010 Elsevier Retail Summit 2010 3

IG&H survey: “Value Chain Mirror” helps retailers making their value chains really work (II)

Context

IG&H commitment towards retail excellence

Changing market demands (in the rebound)

Value Chain alignment becoming differentiator

Objective

How to make value chain excellence really work

Derive key success factors, beyond the obvious

Show a mirror and help participant to next level

Approach & scope

Interviews & case studies per participant

Cross participant findings at Retail Summit

Netherlands based / European scope

Annual survey - first year: Fashion deep dive

Core topics:

Category Management

Supply Chain Management

In season / markdown management

Deliverables

In-depth analysis & benchmark of participant’s

level of Value Chain excellence

Analysis of processes & value chain alignment

Strategical planning process

Tactical planning process

In season execution

Report and feedback session

Concrete recommendations & “Get-to-work list”

© IG&H Consulting & Interim, Woerden – The Netherlands 2010 Elsevier Retail Summit 2010 4

Value chain leadership: Still enormous potential for increased consumer value and reduction of waste

Consumer Value....

Always a reason to go the store

Inspiring & fitting garments

Never disappointments in store

Available, easy to find

Good price/quality balance

Good service

WA

ST

EV

AL

UE

Waste....

Excessive markdowns

Shrinkage

Stock-outs

Quality issues

Cost loading, inefficiency

© IG&H Consulting & Interim, Woerden – The Netherlands 2010 Elsevier Retail Summit 2010 5

Value chain excellence: Excellence is “market alignment” AND “excellent execution” .... at the right level

How will YOU compete?

“Supply Chain

responsive”

“Market

driven”

“Having the

basics right”

“Value chain

leader”

Value chain excellence

1. Market

alignment

2. Excellent

execution3. Move to

next level

© IG&H Consulting & Interim, Woerden – The Netherlands 2010 Elsevier Retail Summit 2010 6

Value chain excellence: Retail DNA makes value chainexcellence inherently challenging

Unclear value chain

vision

Value chain partners

not aligned

Competence gaps

not recognized

Quick-win view

...

Lack of direction Poor execution

IT/outsourcing as

the (wrong) answer

Top-down

programme

Resistance to

change

...

Little perseverance

Leadership not

involved

Failure to empower

line management

Lack of ownership

...

“Supply-chain

responsive”

“Market

driven”

“Having the

basics right”

“Value chain

leader”

What’s YOUR challenge?Main difficulties

© IG&H Consulting & Interim, Woerden – The Netherlands 2010 Elsevier Retail Summit 2010 7

Vision & direction: Commit value chain leadership towards a “True North” consumer driven vision

European fashion retailer:

Consumer-back vision on fast fashion

model (continuous source of reference)

European food retailer:

New value-chain innovation role separated from day-

to-day retail execution

Global coffee retailer:

Vision on sustainability required supplier collaboration

to reduce “value-chain footprint”

Leading Dutch department chain:

Buyer-planner organisation support fast-fashion vision

Leading home improvement retailer: Easy-to-shop principles translated to accelerate

assortment/merchandise renewal

Success factors

Develop “true north” consumer

experience and commit internal and

external Value Chain leaders

Define realistic time path

Fully understand competencies to

deploy, internally and at key partners

Make key changes in VC operating

model - prior to implementation

Structure strategic value chain partner

relationships upfront

Provide clear implementation principles

Vision & directionTrue North

Vision

© IG&H Consulting & Interim, Woerden – The Netherlands 2010 Elsevier Retail Summit 2010 8

DIY retailer: Developing new category mgmt process talked to

2000 consumers , in store, to analyse decision tree

Multi-country shoe retailer: Implementation of Smart buying (simple process &

tools, small steps

Leading food retailer: Clear definition and implementation of meaningful

category captain roles

European Fashion retailer:Long term relationships with all value chain partners to

amintain extremely flexible supply chain and smart

mix of worldwide and regional production facilities

Start bottom up, in the store, know the

customer

First successes: create enthousiasm

Real focus on customer value -

relentless elimination of waste

Focused and pragmatic step-by-step

changes: few at a time, speed will come

Line-driven, with continued senior

involvement - not a staff/project activity

Involve value chain partners: open

dialogue, become excellent together

Robust processes Build

robust

processes

Robust processes: Help the line, step-by-step, build processes and deliver value at (web-)store level

Success factors

© IG&H Consulting & Interim, Woerden – The Netherlands 2010 Elsevier Retail Summit 2010 9

Fashion retailer: Central corporate value : “Next time we do it better” +

fashion retailer training academy

Leading global fashion retailer: Continous alignment during design process in

combined teams (design + sourcing + product dev.)

Leading global food retailer: Senior management leads through active presence in

store

Sports goods manufacturer and retailer: Markdown management teams analysing day-to-day

results

Develop and implement new value

chain capabilities (embedded in

training)

Continuous improvement of processes

with trust based partnerships

Spend >80% of the time in the store,

in the market for new opportunities

Operational management - visualisation

at all levels (consumer data)

Performance management and clear

standards

ClockworkBuild

clockwork

Clockwork: Empower line management to build continuous improvement culture

Success factors

© IG&H Consulting & Interim, Woerden – The Netherlands 2010 Elsevier Retail Summit 2010 10

Current

value chain

level

Build

robust

processes

Implement

clockwork

True North

vision

Next

Value chain

Level

Value chain excellence

Value chain excellence: A value chain improvementapproach that builds on retail DNA

3 year horizon

What’s YOUR value chain DNA?

Small steps

to change

© IG&H Consulting & Interim, Woerden – The Netherlands 2010 Elsevier Retail Summit 2010 11

Retail summit 2010: Do’s and Don’ts to achieve excellence reflect retail DNA

1. True north consumer driven view, change

operating model

2. Vision driven – but gradual clockwork

building approach

DO (builds on retail DNA)

1. Holistic vision / current operating

model

2. Big ambitions – next quarter delivery of

results

DON’T (conflicts with retail DNA)

3. Bottom-up, from the store, line-driven

approach

4. Senior management fully involved in

execution - makes it highest priority

5. Work with value chain partners to

improve and create value

3. Top-down improvement programmes

(HQ driven)

4. Senior management delegates

execution

5. Stay locked into competitive

bidding/tendering trap

6. Empower category and store managers

to make decisions

7. New contract with employees who

subscribe to retail excellence

6. Centralise decision making, based on

numbers and facts

7. People in the store and DC’s are a cost

pool

© IG&H Consulting & Interim

Value Chain Excellence in Retail

IG&H perspective on making the value chain really work

Wassenaar, June 1st 2010

© IG&H Consulting & Interim, Woerden – The Netherlands 2010 Elsevier Retail Summit 2010 13

IG&H: 150 professionals making strategy work - Combining deep industry know-how with the ability to put strategy into execution

Retail Sustainability

Format differentiation

(Lean) Retail Service Excellence

Margin Catalyst

Category management 2.0

Supply Chain Management & Logistics

Supplier value - Smart buying

Marketing effectiveness/ROI

Strategy

Execution

Ma

rkets

Op

era

tio

ns

Recent client experiences

Multi-format, multi-country

sourcing implementation

Category, merchandise

strategy and implementation

Cost to serve / supply-chain

model optimization

Lean implementation within

a large national retailer

Service excellence

programme

E-fulfillment strategy and

solution development

Promotion/price effectiveness

review (margin catalyst)

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