Introducing the ECR Road Map Dr Paul Chapman

Introducing the ECR Road Map Dr Paul Chapman Cranfield School of Management

The ECR Road Map Call to Action 1. Plan 6. Evaluate 2. Map & Measure 5. Implement 3. Analyse 4. Develop Solutions Source: Beck, A. , Bilby, C. A. L. , Chapman, P. A. and Harrison, A. , (2001) Shrinkage: Introducing a Collaborative Approach to Reducing Stock Loss in the Supply Chain, ECR Europe: Brussels.

The ECR Road Map Call to Action 1. Plan 6. Evaluate 2. Map & Measure 5. Implement 3. Analyse 4. Develop Solutions

Call to Action – 1 pager Foregone Income Additional Costs • Sell more… • Variable costs: • …more often… • Fixed costs: • … at higher margin • Others: Sales opportunity = € Cost opportunity = € Scope:

Call to Action - Example Foregone Income • Sell more… – Wider product range – More store locations • …more often… Additional Costs • Reduced Shrink • Reduced expenses – Fixtures • Less Inventory – OSA – Frequent ordering – Increase footfall • … at higher margin – Trade up shoppers – New product lines Sales opportunity = € 15 m Cost Saving = € 2 m Scope = Hot product lines / all stores

The ECR Road Map Call to Action 1. Plan 6. Evaluate 2. Map & Measure 5. Implement 3. Analyse 4. Develop Solutions Source: Beck, A. , Bilby, C. A. L. , Chapman, P. A. and Harrison, A. , (2001) Shrinkage: Introducing a Collaborative Approach to Reducing Stock Loss in the Supply Chain, ECR Europe: Brussels.

Concentrate on ‘Hot Products’ 100% Cumulative Losses 90% 20% of SKUs account for 50% of loss 8% of SKUs account for 30% of loss Number of SKUs

Project Charter – 1 Pager • Which Products? • Process Scope (from where to where? ) • Performance measures and improvement target – Shrinkage – Sales • Time Table – Start date – First results – Project completion - ? ? % + ? ? %

Project Charter – 1 Pager • Which Products? – Hot Products • Process Scope (from where to where? ) – Store operations in hot stores • Performance measures and improvement target – Shrinkage – Sales - 50 % + 20% • Time Table – Start date now! – First results next week – Project completion 3 months

Identify Stakeholders Board of Regulatory/ Directors Government Bodies Suppliers (Shareholders) Colleagues Project Logistics Service Providers Customers Consumers

Stakeholder Analysis – 1 pager People or Groups Affected Names Level of Commitment Enthusiastic Support Help It Work Compliant Hesitant Indifferent Uncooperative Opposed Hostile

The ECR Road Map Call to Action 1. Plan 6. Evaluate 2. Map & Measure 5. Implement 3. Analyse 4. Develop Solutions Source: Beck, A. , Bilby, C. A. L. , Chapman, P. A. and Harrison, A. , (2001) Shrinkage: Introducing a Collaborative Approach to Reducing Stock Loss in the Supply Chain, ECR Europe: Brussels.

Supply Chain Overview Gillette Pack Centre, UK Gillette DC, Hungary Tesco store, Hungary Distribution Node Store

Supply chain process hierarchy Supply Chain Site Process Steps Supplier DC Receive products Retailer DC Retailer Store Put away in warehouse Pick order then marshal pallets Load pallets into lorry Dispatch to Carrefour Dist. Ctr Break seal in yard Back lorry on to dock Unload pallets on to dock Check pallet references Check number of pallets Attach pallet label Move pallet to warehouse location

Map Process Detail Lorry Arrives Check Paperwork & Seal Unload Delivery Sign for delivery Close & Seal Lorry

Measure Basic Inputs and Outputs of Every Site 1 Supplier DC 2 2 2 3 1 Retailer DC 3 1 Retailer Store

The ECR Road Map Call to Action 1. Plan 6. Evaluate 2. Map & Measure 5. Implement 3. Analyse 4. Develop Solutions Source: Beck, A. , Bilby, C. A. L. , Chapman, P. A. and Harrison, A. , (2001) Shrinkage: Introducing a Collaborative Approach to Reducing Stock Loss in the Supply Chain, ECR Europe: Brussels.

FMEA: Risk Assessment • Step 1. Identify the failure modes in each step of the process – In your group brainstorm for 1 minute per step – Capture every idea on a separate Post. It Note • Step 2. Score each failure mode – Use the S / O / D scoring scale S = severity O = likelihood of occurrence D = likelihood of detection • Step 3. Brainstorm the causes of the highest scoring risk – Use the fishbone diagram

Risk Assessment Table – 1 pager Process Step Potential Failure Mode(s) Potential Effect(s) of Failure S O D RPN

Risk Analysis Scoring S O D 1 Single item 2 Case / inner pack 3 Crate / shipper carton 4 Pallet / dolly 5 Lorry load 1 Yearly or less 2 Monthly 3 Weekly 4 Daily 5 Hourly 1 Detectable prior to event 2 Detect as it happens 3 Detect at end of day 4 Detect at end of period 5 Not detectable

FMEA Example Process Step S O D Potential Failure Mode(s) Potential Effect(s) of Failure Key is lost Store goods in hall 2 3 1 6 Free access 2 1 1 2 Free access 2 5 4 40 Goods moved to secure storeroom Lock Broken Door not locked No room in everity store- room S Occurrence Detection RPN Store goods in Measures Effect 2 4 3 24 hall Measures Failure & Effect Measures Failure

Fishbone Diagram • Visual way to represent the relationship between a failure mode and possible causes • Every failure mode will have several causes

Fishbone Diagram – 1 pager People Materials Failure mode Machines Methods

Fishbone Diagram Example People Don’t care, not important Forgot Key holder on holiday Materials Unclear instructions Late delivery to store Lock broken Lost key Machines Other jobs took priority Methods Door not locked

Analysis Summary Process Step 1. FMEA Goods moved to secure store room 2. Fishbone Potential Failure Potential Effect(s) S Mode(s) of Failure Door not locked No room in storeroom O D RPN Free access 2 5 4 40 Store goods in hall 2 4 3 24 Door not locked

The ECR Road Map Call to Action 1. Plan 6. Evaluate 2. Map & Measure 5. Implement 3. Analyse 4. Develop Solutions Source: Beck, A. , Bilby, C. A. L. , Chapman, P. A. and Harrison, A. , (2001) Shrinkage: Introducing a Collaborative Approach to Reducing Stock Loss in the Supply Chain, ECR Europe: Brussels.

Action Planning Improvement / Potential Opportunity ($) Major High Initiative Change Project Quick Win Low Slow/Hard Fast/Easy Ease of Implementation

The ECR Road Map Call to Action 1. Plan 6. Evaluate 2. Map & Measure 5. Implement 3. Analyse 4. Develop Solutions Source: Beck, A. , Bilby, C. A. L. , Chapman, P. A. and Harrison, A. , (2001) Shrinkage: Introducing a Collaborative Approach to Reducing Stock Loss in the Supply Chain, ECR Europe: Brussels.

Been There, Done That? Attributes of Poor Projects Attributes of Good Projects 1. List the attributes of projects you have worked on 2. Highlight the key differences between poor projects & good ones

ECR Road Map Principles • Collaborate and engage all stakeholders • Focus effort on the processes: Products / Information / Money • Identify greatest oppportunities then target root causes • Remove the opportunity for loss or error • Evaluate & learn

ECR Road Map Benefits • • Ensures the right resources and people engaged Better and more sustainable results Less daunting More cost efficient Higher probability of success Quicker to implement Lessons can be reapplied to other problems

The End (or the beginning …. )