The New Distribution Strategy And How IT Enables It
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The document discusses a new distribution strategy and how information technology enables it. It describes trends driving changes in distribution like multi-channel distribution and growing retailer power. It then discusses how a collaborative consolidation center (C3) can help by consolidating shipments from multiple manufacturers into single daily loads to retailers, reducing costs and lead times. Case studies show how C3 has improved order management and reduced transport costs and inventory in the UK and Italy. The role of information sharing and technology integration between manufacturers, C3, and retailers is also described.
The New Distribution Strategy And How IT Enables It
- 1. The NEW Distribution Strategy and How IT enables it Subhan Novianda Director – IS Solution & Marketing Saturday 17 July 2010 Bandung, Indonesia
- 2. Trends & Issue in Distribution • Multi Channel – Multi Distributors • DC as a Profit Center • Growing Size and Power of Retailer NEW DISTRIBUTION • Changing in Consumer Buying STRATEGY Pattern/Behavior • Need to reduce distribution costs • Need to transfer the ‘risk’ • … etc … 2 Title of Presentation 28 August 2010
- 3. Questions ? • NEW DISTRIBUTION STRATEGY : - Is this just another “buzzword” for getting the right product in the right quantity, at the right time and right place? - Or is there something more substantive to this term? 3 Title of Presentation 28 August 2010
- 4. GCI 2016 Value Chain Report Forces & Trends Driving Future Value Chain • GCI : Global Commerce Initiative 4 Title of Presentation 28 August 2010
- 5. For the past 20 years the typical logistics network has not changed a lot. 5 Title of Presentation 28 August 2010
- 6. …. however, we are going towards… 6 Title of Presentation 28 August 2010
- 7. GCI 2016 Value Chain Report The Evolving Value Chain of 2016 7 Title of Presentation 28 August 2010
- 8. Real-Time Visibility Drives the Supply Chain 8 Title of Presentation 28 August 2010
- 9. New Ways of Working Together : Shared Work creates Trust and New Services 9 Title of Presentation 28 August 2010
- 10. Information Sharing: Improving Collaboration & Information Flow 10 Title of Presentation 28 August 2010
- 11. Collaboration in General Difficult to implement – but with clear benefits • Different models appear in different geographies and are initiated by different players • ECR plays an important role in supporting the initiatives: Sustainable Transportation, Collaborative Green Distribution have delivered tangible success •Manufacturer driven -Netherlands MCC -France HeReCo •Retailer driven -USA WalMart -Poland Carrefour -France Carrefour -Colombia Carrefour 11 Title of Presentation 28 August 2010
- 12. CEVA’s Collaborative Consolidation Center - C3 C3 Introduction FROM Characteristics Reduction of expensive part load deliveries Daily full truck deliveries to retailers DCs Full truck replenishment of stock by manufacturers Allows for introduction of Factory Gate Pricing Realigns requirements of both manufacturer and retailer Rationale TO Before After Non standard LHU Standardised LHU Limited QC Integrated QC Varied system Integrated traceability traceability 1 single consolidated Multiple part load delivery per day deliveries per week Logistics is core of Logistics treated as operation non-core 12 Title of Presentation 28 August 2010
- 13. The concept of C3 How does it reduce cost? FROM Rationale % $ reduction TO Order Order fulfillment fulfillment cost (before) cost (after) 13 Title of Presentation 28 August 2010
- 14. The concept of C3 How does it reduce lead time? FROM Principles Admin process reduction due to integrated electronic ordering system Retail DC receives single delivery with multiple orders Stock physically closer to Retail DC Overall deadtime/waiting time in order-delivery cycle is reduced TO 14 Title of Presentation 28 August 2010
- 15. Case Study: C3 in practice - UK Operations Details: Network Overview General •64 manufacturers •Serving multiple retailers •Daily deliveries •Facility acts both as C3 and RDC Facility •31,000 square meter shared user facility •30,000 functional pallet capacity •136 personnel employed on site •32 vehicles based on site •Over 300 full loads to Retailers per week Value-Creation: Reduced Transport costs Daily order capability Out-of-Stock reduction at Retail end Reduced inventory at Retail & Manufacturer Improved supplier service levels Improved efficiencies at DCs Better turnaround for transporters Back hauling development 15 Title of Presentation 28 August 2010
- 16. Case Study: C3 in practice - Italy Operations Details: 6 DC LTL General •100 manufacturers 3M Carrefour DC •Serving one retailer •Daily deliveries •Franchised & owned stores services LTL •Different store format serviced ( Super & Hyper) Manufacturer “Y” Carrefour DC Facility •7,000 square meter shared user facility LTL •10 000 functional pallet capacity •Staff: 134 •Covered area: 159.000sqm Manufacturer “Z” Carrefour DC •Over 18 full loads to retailer’s 6 DC per week 6 DC Value-Creation: Improved order mgt. Franchisees & own stores Sequencing & FTL FTL 3M Carrefour DC scheduling FCL Reduced transport budget Service level improvement starting from 88 % to 95 % FTL Stock reduction at Retailer DC Improved order visibility Manufacturer “Y” C3 Carrefour DC Retailer & Manufacturer sales increase Reduced operation cost at Retailer DC FTL Potential transport management solution incl Retailer own fleet CO2 emission reduction / pal transported Manufacturer “Z” Carrefour DC 16 Title of Presentation 28 August 2010
- 17. C3 is offered as a complete range of modular services CEVA Logistics C3 Solution C3 Core Consolidation Outbound Information Transport Management Services Retailer VMI / Primary POD Pooling Transport Management Solution Management C3 Manufacturer Stock Inbound Dedicated Network Extended Management Transport Storage Distribution Services Returns Pallet VAS Management Management support Asset & HR IT Platform Finance & Logistics Provision Provision Admin Engineering services 17 Title of Presentation 28 August 2010
- 18. C3 Operational Model manufacturer C3 retailer Inbound Receiving Checking Putaway Pallets Racks flows SSCC Loose BBD Storage & replenishment Delivery Inbound Outbound Transport Transport POD Stock Control Picking Checking Loading Outbound Pallet SSCC flows Case Pallet BBD CEVA Logistics manages product from moment it enters C3 through to the retailer point of destination CEVA Logistics prepares consolidated order ( grouping orders for different manufacturers’ products) sent by retailer CEVA Logistics delivers a full load to Retailer DC every day 18 Title of Presentation 28 August 2010
- 19. C3 Information Model manufacturer C3 retailer Single orders Aggregated multi suppliers Inventory report orders Stock visibility ERP P.O.D. Dispatch advice ERP WMS Shipment Tracking Shipment Tracking The Retailer sends individual orders to the manufacturer and an aggregated multi-supplier order to CEVA CEVA executes and fulfils against the aggregated retailer order Retailers receive dispatch advice as ASN Manufactures receive PoD information and inventory reports 19 Title of Presentation 28 August 2010
- 20. Questions on IT Solution : • Should We implement ERP ? How far / deep ? • How about the Order Management System ? • How about Logistics Execution System ? - Warehouse Management Systems - Transport Management Systems • Supply Chain Planning Optimizing ? • Route Optimizing? •Service Oriented Architecture ? 20 Title of Presentation 28 August 2010
- 21. Simple Suggestions • Implement IT for business purpose , not for the sake of Technology. • Put IT where & when it makes sense. • Often , One solution can not fit for all issues. - Different Issue – different solution. 21 Title of Presentation 28 August 2010
- 22. Thank You ..! Any Question .. ?