SKUBudi Hariadi

Category Supply Planning

P&G Asia

28 Oct 2005

that really works and delivers…

SIMPLIFICATION

CONTENT

1. BUSINESS GOALS

2. OPPORTUNITY

3. SOLUTION

4. RESULT

5. RISK & LEARNING

#1 Drive Core Categories/Brands via Key Business Drivers.

#4 Deliver Competitive Profitability for our Customers.

Business Unit Goals

1. Win together with customers when the consumer chooses.

2. Win disproportionately with winning customers

3. Right Product Right Time Right Place Right Cost.

Strategy

SKU Simplification will deliver 7 percent less inventory

Goals

Cash

Opportunity

Internal External

Stock outs

Excess stocks

Highest loss sales

Top SKU…

Too many SKU…

Bottom 20% SKU is only 1% volume, carrying 5% inventory, spending 2.2$MM remnant.

SKU proliferation erodes service performance, badly

Excess and stock outs, supply chain pipeline is bursting.

Solution

Functional Alignment

Sales & Operation Planning

ExecutionRobust Data Analysis

• Product launch minimum criteria

• Develop common package multi-lingual solution

• Rationalization discussion

• Sensitivity Analysis - Profit, Sales, Volume

• Volume recovery assumption

• SKU Productivity• Inventory Impact• Remnant Impact

• Profit > minimum SKU threshold

• Top 2/3rd category sales

• SKU Productivity • Supply Chain

Savings• Mfg. Site Execution• Conversion Plan• Risk Management

Principle & Criteria

• S&OP Plan & Tracking

Result & Capability

Result

10 percent SKU reduction2 Brands52 SKU

1 percent Inventory cash savings

20 percent Year 2 Goal Next-level capability

Year 0 Year 1 Year 2

SKU Productivity 43 51 61

Risk & Learning Summary Critical Risk Consequences Plan to Mitigate Risk

Product discontinuation may cause volume loss in the short term period, from stop sell to volume recovery date

1-2% volume dropped Develop robust customer communication, promote core SKU

Execute rationalization with new product launch for shelf optimization.

Product discontinuation may have permanent shelf space loss impact

5-10% shelf space dropped Align customers to leverage shelf space for higher performing product

Learning Summary

1. P&G and customer had common problem in managing Slow Moving SKU.

2. SKU Simplification eliminates continuous losses, always striving ahead of customer reaction to delist products

3. Cross functional team collaboration is a powerful to improve results and minimize losses

4. Robust risk-management plan to eliminate or mitigate impact.