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

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

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

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

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

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

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 - 50 % –Sales + 20% Time Table –Start datenow! –First resultsnext week –Project completion3 months

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

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 2. Map & Measure 4. Develop Solutions 5. Implement 6. Evaluate 1. Plan 3. Analyse 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.

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

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

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

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

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

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

FMEA Example Process Step Potential Failure Mode(s) Potential Effect(s) of Failure SOD RPN Goods moved to secure store- room Key is lost Store goods in hall 2316 Lock Broken Free access2112 Door not locked Free access25440 No room in store- room Store goods in hall Measures Effect S everity Measures Failure & Effect O ccurrence Measures Failure D etection

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

Failure mode People Materials MachinesMethods Fishbone Diagram – 1 pager

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

Analysis Summary Process Step Potential Failure Mode(s) Potential Effect(s) of Failure SODRPN Goods moved to secure store- room Door not lockedFree access25440 No room in store- room Store goods in hall24324 Door not locked 1. FMEA 2. Fishbone

The ECR Road Map Call to Action 2. Map & Measure 4. Develop Solutions 5. Implement 6. Evaluate 1. Plan 3. Analyse 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 ($) High Low Slow/HardFast/Easy Ease of Implementation Change Project Quick Win Major Initiative

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