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Driving Growth and Improving Costs in
Collaboration for One Supply Chain
FMI-GMA Supply Chain Conference
February 16, 2015
Mark Hersh – Clorox
Lisa Malvea – Clorox
Kevin Zweier – CHAINalytics
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Our 2020 Strategy has aggressive goals…requiring new thinking…
Deliver top third Total Shareholder Return
Grow Net Customer Sales to the higher end of 3-5% per year
Grow EBIT Margin 25-50 basis points per year
Grow Overall Market Share
…and partnering with others will help deliver our targets.
We are all trying to solve the same problems. We believe partnering with
our retailers and suppliers will result in integrated solutions and more
transformational value for both parties.
Why Collaboration Matters
The marketplace where we compete is
getting more complex and diverse.
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Many are extremely
value conscious
Multiculturalism
requires right
product designs
Aging population
in the U.S.
Technology gives
consumers access to
an incredible amount
of real time data
Consumers outside
of the U.S. have
different needs
Shopping patterns
and preferences
are becoming more
diverse
Serving our consumer base is becoming more challenging
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Amazon
continues
to grow
exponentially
Retailers demanding lower working
capital, increased differentiation, and
improved profitability
Explosion in new
channels and
store formats
Increasing
supply/demand
imbalance
Clorox has
entered
several new
channels
Market place continually changes and adds complexity
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Voice of Customer
Ask/Listen/Learn Voice of our Customer
• Strategic Direction
• Objectives & Priorities
• Capability Needs – Now & Future
• Clorox Gap vs. Needs
Assess Model
Analytics to identify ways to improve performance – cost, efficiency, growth
Activate via Planning Process Build & Create Operationalize Measure
Refresh & Recap Accountable for continuous improvement
Why Is VOC Important?
• Listen to hear and understand Customer’s Voice
• Learn from all voices: Consumer, Shopper, Customer, Supplier, Competition
• Incorporate wants/needs into business rhythm for plans/resources
Buy > Make > Ship
Base Operations
Joint Value Creation
Transformational Change
Store Display, Inventory, OSA
Improving Sales & Profitability
Improvement Services
Scorecards & Proactive
Problem Solving
Proactive Analytics on Base Operations
Trusted
Partners
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Supply Chain Advisory Services
• Sales not optimized in top stores
• Too much inventory in bottom stores
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Agile Inventory, an Improvement Service
Growth Planning Process
• Layered, dynamic and disciplined
• Smart inventory to the right stores
Peanut Butter Approach
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Value Stream Mapping “Lite”
Improve the process from start to finish
Reduce/eliminate waste and remove time
Become more agile, responsive and cost-effective
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One Supply Chain
Think as “One Company” around supply chain
Suppliers +
Clorox +
Customer
Suppliers
Clorox
Customer
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Joint Warehousing & Co-Shipping
Multiple Manufacturers Consolidate Warehousing
Multiple Manufacturers Ship to Same Retailer
Voice of Customer “Listen to Hear and Understand” your “Customers” with discipline/cadence
Incorporate their voice into your operating plans — TAKE ACTION
Refresh plans annually based on new information
Supply Chain Advisory Services with Retailers Base Operations: a Must with/before Improvement Services + Transformational
Jointly commit to partner, learn & create value together
Discipline + Diligence to drive iterative improvement with accountability
“One Supply Chain” Use transparency to drive wins across the supply chain
Requires a new level of communication
Utilize End to End Metrics to improve OSA and Profitable Growth
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Learnings & Insights
Adopt Voice of Customer cadence to improve plans
Apply Supply Chain Advisory Services to improve partnering,
sales & profitability across One Supply Chain
Advance Agile Inventory with more partners
Employ Value Stream Mapping “Lite” to create joint value
Identify and employ end-to-end Metrics to improve OSA for Shopper/Consumer
Continue looking for opportunities to improve efficiencies and grow
topline
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Path Forward
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Driving Growth and Improving Costs in Collaboration for One Supply Chain
WHO IS CHAINALYTICS?
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11 YEARS
GREAT SUPPLY CHAIN PARTNER SupplyChainBrain
8 PROS TO KNOW
Supply & Demand Chain
Executive 2013
COOL VENDOR in supply chain services
Gartner
18 TOP 25
supply chains of Gartner’s
ATLANTA BANGALORE MILAN MINNEAPOLIS HELSINKI SINGAPORE STOCKHOLM SYDNEY 8 offices
GLOBAL 5 RETAIL TOP 10
7 FOOD & BEVERAGE TOP 10
6 CPG TOP 10
80 of the
FORTUNE 500
5 PAPER & PACKAGING TOP 10 TOP SUPPLY CHAIN SCHOOL
67 %
WITH DEGREE FROM consultants
of
*
23 BILLION
$ FREIGHT spend captured in FMIC
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Strategic Alignment
Performance Improvement
Transformation
Descriptive & Diagnostic Analytics
Predictive & Prescriptive Analytics
Intelligence Networks
Decision Support
Technology
FACT-BASED TRANSFORMATION
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Supply Chain Design
Integrated Demand & Supply
Planning
Sourcing & Supplier
Management
Packaging Optimization
Supply Chain Operations
Transportation Service Supply Chain
OUR COMPETENCIES
FREIGHT MARKET INTELLIGENCE CONSORTIUM
Chainalytics’ FMIC provides market rates for transportation at the lane level
MODEL MEMBERS SPEND
TL & IM (N.A.) 102 $18B
TL (Europe) 10 €1B
LTL (U.S., CAN) 24 $600MM
Ocean 16 $283MM
Current FMIC Models
What are estimated costs for lanes in which I am not operating today?
Are there opportunities to convert from collect to prepaid freight?
(TL & LTL)
Rate Estimators
MODEL MEMBERS SPEND
TL for 3PLs 15 $2B
LTL for 3PLs 3 $168MM
In what direction will rates trend in the future?
What are members paying for freight costs outside of linehaul and fuel?
(ALL MODES)
Market Intelligence
What is my overall cost position to the market?
How are my carriers performing against the market?
(ALL MODES)
Performance Reports
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FMIC TRUCKLOAD MEMBER DEMOGRAPHICS
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Largest TL and Intermodal benchmark consortium in North America, providing apples-to-apples comparison of costs by lane and service
Model Statistics (as of July 2014)
$18.2 Billion in transportation spend
16 Million truckloads
102 Members with TL spend ranging from $5MM to 500MM
Includes U.S., Canada and in/out of Mexico
7 Models (Dry, Temp-Control, Intermodal, Flatbed, 3 Short Haul)
Equivalent to about 7% of the total North American for-hire TL market
Industries by Transportation Spend
Retail
$3.6B (19.89%)
Consumer Goods
$1.7B (9.43%)
Paper/Packaging
$1.7B (9.51%)
Industrial/Other
$1.6B (8.81%)
Food &
Beverage
$9.5B
(52.36%)
Members by Annual Spend
>$200MM
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<$50MM
22
$100-200MM
31
$50-100MM
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HOW OUR CUSTOMERS USE COLLABORATION
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Using analytics to identify opportunities to collaboratively transport products from multiple CPG manufacturers to a retailer
Utilizing 3rd party to manage and execute the collaborative shipping and cost allocation process
Reducing cost-to-serve while increasing velocity
Investigating opportunities for operational feasibility
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LIFECYCLE OF TRANSPORTATION SOURCING EVENT
Getting Ready Rate Collection & Communication
Scenario Analysis
Post Awarding
These areas typically get all the focus.
These areas have the biggest
impact on savings.
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CHALLENGES OF A CONSORTIUM SOURCING EVENT
Finding the right partners
Agreeing on how to approach the market
Confidentiality
Agreeing on bid structure and carriers
Dealing with huge carrier bases
Finding synergies across the networks that can truly be realized
Awarding together or separate and ensuring savings opportunities are realized
Getting Ready Rate Collection & Communication
Scenario Analysis
Post Awarding
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WHAT IS LANE MATCHING?
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Typically two large shippers working together to find cross-network collaboration opportunities
Chainalytics is typically brought in after partnership is established, but we have matched companies up as well
Both parties typically agree to allow Chainalytics to expose some rate information so lane matches are cost justified and the savings communicated
C
B
A
D
LANE MATCHING OBSERVATIONS
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The one way carrier market is an efficient pricing mechanism
Backhaul lane matching continues to be an incremental opportunity
Most opportunity will materialize where one of the potential partners has underutilized fleet assets
May potentially be pursued as “contract carriage” opportunity by
the fleet operating partner
There may be an opportunity for 3PL transportation partners to
act as the coordinator between the interested parties
The “Devil is in the Details” – these opportunities can only be
explored by direct conversation between the parties with
matching geographies and frequencies.
