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FCPC SymposiumSupply Chain Think Tank SummariesApril 19, 2012What action can you take?Lets continue the discussion!Visit www.gpsqtc.com/fcpc

Summary of common issues across Supply Chain functions (across all Think Tank groups)Summary of Collaborative OpportunitiesExamples of actions and results in various Food and Consumer Products companiesCommon Issues across all groupsCost management Impacts to cost and/or financial productivityInformation visibility and demand anticipationAccess to upstream and downstream information that helps anticipate and absorb demand changesSupply chain strategy and planningSupply chain structure and planning decisions that match supply to demandPerformance measurement and information standardizationUnderstanding of performance and key supply chain information through existence (or lack) of Key Performance Indicators (KPIs) or information standardsSupply chain execution conflicts/mismatchesAnything that prevents the smooth flow of products/transactions within and between functions3Collaborative OpportunitiesEffort to share planning data (especially downstream sales and demand data) to anticipate demand spikes and improve planning accuracyCooperative effort to jointly understand and improve supplier/customer factories will lead to win/win savings, aligned expectations, KPI commonality, information standardization, etc.Jointly examine failures in supply chain execution processes to catch and solve defects within and across departments/functionsSupply chain strategy sessions in which supplier/customer jointly make decisions on site locations, manufacturing and inventory strategies, use of third parties, etc. Define cross-supply chain KPIs and performance management to optimize the extended supply chain4Colour coded affinity of common issues across all bullet points5Common Issues across all groupsCost management in a productivity-focused environmentInformation visibility and demand anticipationSupply chain strategy and planningPerformance measurement and information standardizationSupply chain execution conflicts/mismatches6Logistics Order Size, Frequency, Supplier Mgmt. Relationships, Velocity, Lead Time, Customer ExpectationsLack of Visibility to Forward DemandCost of FuelLabourDriver ShortagesRegulations

Logistics cont.Truck CapacityAsset AvailabilityCost of Real EstateCore Business Hours Now 24/7Network Design ChallengesAbility to Respond 3PLOTR vs. IntermodalDelivery Performance/Carrier MetricsAccessorial Charges

Customer Base ExpansionCustomer Fleet Mgmt. CostPush vs. Pull Over Production from PlantsIn-Bound Unloading SchedulesFood SafetyEmergency Response PlanFood SecurityCross-Border Regulations & InspectionsPackage DesignLogistics cont.Manufacturing Forecast accuracy Inventory Carrying CostProduction Costs ProcurementTransportationCapitol expenditures for capacityCost of poor QualityScrapReworkDowntimeMaintenance costs and overhead

Manufacturing cont. Throughput EfficiencyLack of common production metrics across the supply chainSkilled labour shortagePackaging costsDesign costsEspecially running design changes

Warehouse Retail Ready PackagingWhat is the true definitionHow will this affect our futureForecasting models Vs Plant batch/run sizesBasic fact we are always in the middle between sales and productionIncreasing demand in Customer freshness requirementsSKU rationalization opportunities

Warehouse cont. Lack of Industry Standards in Retail DemandsPack sizeOrder sizeASN requirementsCompliance fees24/7 coverageLabeling Box CodingComplex shipping specs and delivery requirementsCustomer Pick-up

Inside the Warehouse Skilled labourAutomate vs. Manual vs. Flexibility vs. CostHow do we determine the best solutionOperational efficiencyTemperature controlled cost optimizationMaintenance costsCases per hourCost per casePick accuracyDamage LIFO , FIFO and FEFO (First Expired First Out) how to organize

Inside the Warehouse cont. Destruction Costs Basic understanding that Warehousing is moving from a cost of doing business to need to optimizeConsolidating opportunities, when and how. Distribution Network Optimization Possibilities to share resourcesCost and over head is shouldered individuallyOwning vs Partnering vs Multi-partner vs 3rd Party

Customer Service #1Anything that prevents the smooth flow of products/ordersOutcome of any discrepancies caused by interruptions in product/order flow (i.e. fines)*Data integrity (general)*Retailer fines process more aggressive and starting to involve customer service requires new skills in customer servicePricing mismatches (internal and external)Mismatch of information between sales, category managers, and customers regarding pricing, timelines, new product introductions* High importanceCustomer Service #1 cont.Product availability and availability date mix of attendees have ATP. One-offs and small shortages particular issue. Often dont know when product is short until after should have shippedDifferences between customer forecasts and what was ordered leads to product allocationsBooking customer appointments to deliver at customer. Some companies leave that task to carriersCustomer Service #1 cont.Expediting due to:Customer replenishment setupForecasting errorsDeduction management (difference between whats received vs. what was orderedReconciliation of all returns (store, distributor/DC) for various reasons (discontinuation, past shelf life, seasonal, quality, damage, pick error)Trade funds deduction vs. payment by check for invoicesProductivity major focus areaCustomer Service #2Scope of the discussion:Order-to-DeliveryWho is the customer?RetailersWith respect to the above, what are manufacturers biggest pain points?Customer Service #2 contBrainstorm output unfiltered:Lack of technology at retailersi.e. Dock Scheduling SoftwardWarehouse capacityNumber of doorsWarehouse spaceIncremental chargesOff-loadingDetention

Customer Service #2 contBrainstorm output unfiltered (Cont):Preferred carriersLack of communication within and across retailer functionsi.e. Supply Chain vs. MerchandisingLack of communication across manufacturer functionsi.e. Sales vs. Supply ChainManufacturers SC resources act as brokers, can influence but have no authority Customer Service #2 contBrainstorm output unfiltered (Cont):Within manufacturers organization:Lack of Sales visibility/accountability to Supply Chain needsConflicting reward systems across functions (Sales vs. Supply Chain)Reactive efforts saps time of SC resourcesPrevents value-add customer serviceLack of common measures of success across trading partners (Sales/Marketing/Manufacturing/Distribution)

Customer Service #2 contSummaryLack of common success measures across trading partners (functions)Lack of alignment of reward systems across functionsLack of communicationAcross manufacturers functionsAcross and within retailer functionsLeads to inefficient use of manufacturer resources and less effective processes to serve the customer (retailer)