Frank Zimmermann on Shelf Availability

Frank Zimmermann

( Customer Service Development Manager )

ECR BALTIC FORUM

RIGA, 14th of November 2007

On Shelf Availability

Agenda :

1. Unilever

2. It all starts with the shelf

- statement 1

- Unilever : global OSA - activities

3. OSA Germany

- GS1 working group

- consumer reaction

- GS1 : next steps

4. Root cause : examples / snap shots

5. Why OSA is important

6. OSA : Unilever approach

- statement 2

7. ECR activities

- statement 3

Bee :

Represents creation,

pollination, hard work and

bio-diversity. Bees symboliese

both environmental challenges

and opportunities.

Heart : a symbol

of love, care and health.

Tea : a plant or an

extract of a plant,

such as tea. A symbol

of growing and farming.

Unilever mission: Vitality

Vitality is the heart of Unilever. Our

mission is to meet everyday needs for

nutrition, home hygiene and personal care

with brands that help people feel good

and get more out of life.

Hair: a symbol of beauty and

looking good. Placed next to the

flower it evokes cleanliness and

fragrance; placed near the hand

It suggests softness.

Unilever

206 000 employees,Ice Cream, Foods ambient & chilled,Home and Personal Care

business in around 150 countries

• ca. 40 Billions € Turnover

• 150 Mio. shopper every day for Unilever products

• 5 Billion € for advertising & promotions

• 1 Billion € invest in R&D

• 5.169 employees in R&D

• 337 production sites on 6 continents

Unilever

Unilever

22 Countries

83 Sourcing Units

It all starts with the shelf

Europe�UK

�Poland

�Finland

Latam�Argentina

�Brazil

�Chile

�Mexico

`

Asia�Thailand

�Vietnam

�Indonesia

AMET�South Africa

�Turkey

�Arabia

NA�US

�Canada

�Germany

�Portugal

�Baltics

�Denmark

�Italy

Europe�UK

�Poland

�Finland

Europe�UK

�Poland

�Finland

Latam�Argentina

�Brazil

�Chile

�Mexico

`

Asia�Thailand

�Vietnam

�Indonesia

AMET�South Africa

�Turkey

�Arabia

Project Planned

NA�US

�Canada

Project in Place

�Germany

�Portugal

�Baltics

�Germany

�Portugal

�Baltics

�Denmark

�Italy�Denmark

�Italy

Unilever : global OSA activities

� Availability Increase

� Retailer 1 94% to 99.6%

� Retailer 2 91% to 97.5%

� Biggest Losses:

� Retailer 1 (H & B)

� New product

introduction (NPD)

� Order process (demand

signal)

� BOS organisation

� Active SKU v. inactive

SKU’s database errors

� Retailer 2

� Inventory Accuracy (PI

alignment)

� Promotional Forecasting

Availability Increase

� Foods 97% to 98.8%

� HPC 89% to 98.2%

Biggest Losses :

� Retailer 1 (Foods)

� merchandising errors

� Order process (demand signal)

� Retailer 2 (HPC)

� Co-packing failure

� Order process (demand signal)

� BOS - shelf organisation

� Factory Supply Failure

� Promotional Forecasting

� Active SKU v. inactiveSKU’s database errors

Availability Increase

� Retailer 3 94% to 97%

(best in class – globally)

� Retailer 1 88% to 97%

Biggest Losses

� Retailer 3(Laundry & Beauty)

� New product introduction

(NPD)

� Order process -tbc

(demand signal)

� PI alignment (inventory

accuracy)


� Retailer 1 (Frozen)

� Cabinet Replenishment


� Order process

� New product introduction

(NPD)

ASIA UKMIDDLE EAST

Global

Retailer 2

Global

Retailer 1

Global

Retailer 2

Global

Retailer 3Global

Retailer 1



Jan’05 Dec’06

OSA growth

OSA growth

+ 2.8%

+ 3.2%

Jan’05 Dec’06

96.2%

99.0%

95.7%

98.9%

40

stores

32

stores

Retailer 2

Retailer 1

Poland

� Development of a root cause catalogue alongside the

Supply Chain ( SC ) : factory to shelf ��

critical points:

- flow of information

- flow of goods

- organization: people,

processes

� Investigation : study of shopper behaviour in case of Out of Shelf ��

� Development and publication of an “application recommendation”

on OSA : done on 7th ECR days Germany 2006 ��

GS1 – Germany : OSA – working group

Milestones I

.

.

.

HQ CustomerHQ Industry


Buys a different brand

Buys same brand elsewhere

Returns later

Buys a different size

Buys nothing

Consumer reactions on out of

stocks (carried out in

hypermarkets)

37 %

21 %

17 %

16 %

9 %

4 billion €

lossper year

Deutschland

44 %

11 %

11 %

17 %

14 %

1 billion €

lossper year

70 %

13 %

0 %

17 %

Next Steps :

-Run OSA Projects to gain practical expertise

-Integrate / investigate in new technologies, like RFID

-Involvement of additional business branches

-Investigate in : OSA & promotions-Investigate in : OSA & seasonalities-Investigate in : OSA & working capital

=> Program projected up to end 2008


OSA – working group : some root causes

Hand and

Body

Shelves

difficulty to

keep neat


Smaller

similar

packages

are getting

mixed

together


When spaces were

empty they became

dumping grounds

by consumers.


Shelf looks full

– 2 SKU’s are

missing


Back Store Organization

Why is OSA Important?

� Out of stocks can be a lost sale

for both manufacturer and

Customer

� It is the biggest reason for

Customer loyalty and brand

defections

� Once you lose a shopper, it’s

difficult to get them back

� All of our global strategic Customers have identified OSA as a top priority

Unilever Approach

To On Shelf

Availability

Unilever : 5 Step Approach

Principles of the 5 Step Approach

Loss One

Why is the product not on

the shelf when it is in the

store stock system and in

the back of store?

ProcessPeople

PlaceProduct

Redesign cabinets / 5S -

Tesco and Unilever

Product horizontally

stacked in cabinets place

Col our coding of packaging

- Tesco

Poor Packaging

identification

Simplify packaging labelling

- Unilever

Artwork difficult to

differentiate

Review no. of units / work

with Tescos for theirrequi rements - Tesco and

Unilever

Too many overstocks

Better shelf organisat ion / 5S

- Tesco and Unil ever

Ri ght space for

right products

Better Category

Management organis ation -

Tesco and Unilever

Categori es split

across aisles

Category Management /

better pl anograms - Tesco

and Unilever

Planograms -

linear not cube

Redesign BOS, Revi ew

equipment used - Tesco

Product too high toreach in

Traini ng - Tesco and UnileverCommunication of

promotional ends

Better staff training / Incentives

- Tesco

Not aware of OOS

Review process / 5S - TescoDiscontinued lines left

on shelf

Better equipment planning - Tesco &

Unilever

Rol l cages not sorted at

DC

Use OPL’s to hightlight - Tesco and

Unilever

Working cages process

was not cl ear

Review process - TescoStock rotation

difficult

Review sales / shelf levels - Tesco and

UnileverMerchandising

Plan compliance


with Tescos for their

requirements - Unilever

Case sizes too bi g

Recruitment - TescoInsufficient

merchandising personnel

Better training of staff

activities - Tesco

Product left on floor too

long

• TPM focuses on continuous improvement by

empowering all employees

• Unilever has 15 years of experience with TPM

in factories in all regions

• TPM ensures sustainable solutions

• Unilever has used the TPM toolkit to develop

the OSA improvement programme

Top to top meeting

Two times a year, OSA is on the agenda during

the top to top meeting between Retailer and Unilever

Steering group

Quarterly meeting with top management. Customer

Director, Supply Chain director Unilever & retailer

Project team

Monthly meeting with CD and SC project manager, Customer Relationship

manager to determine root cause and to take corrective actions

Key Success factors

• Commitment of Retailer and Unilever to improve On Shelf Availability

• Defining clear targets

• OSA is an integral project

• Focus of Unilever and the Retailer on the extended Supply Chain

• Willingness to share information and insights in all parts of the Supply

Chain and transactional processes

Agree definition

• Preferably, measurement of absolute out of stock (OOS) and nearly out of

stock (NOOS) = number of products is less than the number of facings

Strategic Alignment, agree definitions

NOT Found in BoS

4 15%

Found in BoS

8 30%

OOS

26 100.00%

On Hand

45%12

On Order

6 25%

NOT on Order

8 30%

NOT On Hand

14 55%

Why are these lines left on shelf?

Why is it not onthe shelf?

Why is it not in the Store?

Why was it not found?

In Depot

4 16%

NOT in Depot

2 8%

Discontinued

4 15%

Where is the product?

Why are theynot

ordered?

Loss Tree

ProcessPeople

Place Product

Redesign BOH / 5S - Retailer

and Unilever

Product in wrong

place

FIFO / Ageing report to be

implemented - Retailer

Product expired / Out of date

Simplify packaging

labelling - Unilever

Wrongly labelled product


with retailers for their

requirements - Retailer and

Unilever

Too many units in a

case

Better BOH organisation / 5S

- Retailer and Unilever

Product in

wrong location

Better BOH organisation -

Retailer and Unilever

Product not

visible in BOH

Category Management /

better planograms - Retailer

and Unilever

Inadequate space

on shelf

Redesign BOH, Review

equipment used - Retailer

Product too high to

reach in BOH

Better staff training / Product

packaging produced with local

language or product pictures-

Retailer And Unilever

Language barrier

Training - Retailer and UnileverNew personnel

Better staff training / Incentives

- Retailer

Not aware of OOS

Review process - RetailerInadequate replenishment

procedure

Better equipment planning - RetailerEquipment not available

to offload

Shorten product leadtime - Retailer and

Unilever

Product in receiving

area but not in its bay

Training and label review process -

Retailer

Misleading label

on shelf

Review minimum stock levels. Review

ordering process. Shorten delivery lead

time - Retailer and Unilever

Product

just arrived

Colour coding of packaging -

Unilever

Product not easy to identify

Recruitment - RetailerInsufficient

merchandising personnel

Better planning of staff

activities - Retailer

Merchandisers too busyProblem 1

Why is the product not on the

shelf when it is in the store

stock system and in the back

of store?

Root Cause Analysis

� Establish Improvement Workshops to:

- Review information and status based around the loss

tree data

- Using the loss tree, categorise the losses

- Analyse each major loss and agree activities to solve

the problem

- Capture these activities on the action plan

Keep a record of actions and agree dates for completion

- Review the action list at the start of each workshop

Implement Solution

Gene Toner : OSA Manager Europe

( Efficient Consumer Response )

Electronic Data Interchange ( EDI ) ��

Information with products ( EAN, EAN128 ) ��

Masterdata Informationssystem ( SINFOS ) ��

Continuous Replenishment Program ( CRP ) ��

Collaborative Planning Forecasting Replenishment ( CPFR ) ��

On Shelf Availability ( OSA ) ��

Radio Frequency Identification ( RFID ) ��

Shelf ready package ( SRP ) ��

…

Unilever is engaged in GS1 workingparties, to collaborate with industry and trade partners

ECR

Chris Bull : Unilever Chief Customer Dev. Officer

end, thank You for listening

Questions

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Frank Zimmermann on Shelf Availability

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