Stanford Supply Chain Forum Stanford Supply Chain Forum
-
Upload
thesupplychainniche -
Category
Documents
-
view
1.316 -
download
3
Transcript of Stanford Supply Chain Forum Stanford Supply Chain Forum
1
DRAFT
Stanford Supply Chain ForumStanford Supply Chain Forum
February 9th
2
DRAFT
Operationalizing the Vision: Where Supply Chain Intersects Strategy
Operationalizing the Vision: Where Supply Chain Intersects Strategy
3Stanford Supply Chain Forum 2005
In the beginning…In the beginning…
4Stanford Supply Chain Forum 2005
The Tornado SaleThe Tornado Sale
5Stanford Supply Chain Forum 2005
Enter Best BuyEnter Best Buy
6Stanford Supply Chain Forum 2005
Industry ConsolidationIndustry Consolidation
7Stanford Supply Chain Forum 2005
Evolving store conceptEvolving store concept
8Stanford Supply Chain Forum 2005
Infrastructure for growthInfrastructure for growth
9Stanford Supply Chain Forum 2005
To Grow: Grab market share & gain new customersTo Grow: Grab market share & gain new customers
eCommerce International
Musicland Acquisition High End Specialty
10Stanford Supply Chain Forum 2005
Best Buy Today Best Buy Today
• 780 North American stores
• FY04 revenue: $24.5 billion*
• 17% market share
• No. 1 in consumer electronics,No. 2 in home office andentertainment software
* Continuing operations
11Stanford Supply Chain Forum 2005
Strategy Inspired by Customers Strategy Inspired by Customers
12Stanford Supply Chain Forum 2005
Customer Centricity CapabilitiesCustomer Centricity Capabilities
Efficient Enterprise
Customer Driven
Talent Powered Branding
Core competence: engaging and empowering our people
Enabling competence: Recognizing a unique set of customer segments and building a set of activities to
meet their unmet needs
13Stanford Supply Chain Forum 2005
A ChallengeA Challenge
Incremental Incremental NPVNPV$
EVA
Store Age
14Stanford Supply Chain Forum 2005
Creating a Sustainable Competitive AdvantageCreating a Sustainable Competitive Advantage
• People and experience• Unique competencies that are difficult to duplicate• Data, information and processes• Relationships, alliances and marketplace
positioning
15Stanford Supply Chain Forum 2005
Store Readiness PlanStore Readiness Plan
• Leadership• Talent • SOP
16Stanford Supply Chain Forum 2005
Business AcumenBusiness Acumen
Grow profits while we prepare
Close Rate
UPT Units Per Transaction
ASP Average Sales Price: Per unit
Net Gross Margin %“Entire companydriving the benefits”
17Stanford Supply Chain Forum 2005
Accelerating Scale for RolloutAccelerating Scale for Rollout
Leadership
Business Acumen
SOP
Talent System
Enablers / Infrastructure
Scaleable Learnings
Scale Segments
Leadership
SOP
Talent System
SegmentationTop TalentTraining
VPE DeploymentCC Score carding
600-Store Plan 70-Store Plan
Same Plan
Different Plan
18Stanford Supply Chain Forum 2005
Roadmap to “7 x 7” Op. Income GoalRoadmap to “7 x 7” Op. Income Goal
FY05 Q1(ttm)
Best BuyCanada
SupplyChain /
Sourcing
IT StrategicAlliance
CustomerCentricity
FY07 Goal
5.4%
7.0%
19Stanford Supply Chain Forum 2005
Best Buy Overview – About Best BuyBest Buy Overview – About Best Buy
• North America’s largest consumer electronics retailer in the $130B consumer electronics market
• 2004 revenue: $24.5B• 2004 net income: $705M• Current market share – 19%• Currently operates over 750 stores• In 2005, will open 70 new large format 45K sq. ft stores
and additional small format 20K sq. ft. store in select markets
• Also operates 100+ Future Shop retail locations in Canada and 22 West Coast high-end Magnolia stores
20Stanford Supply Chain Forum 2005
Best Buy Overview – Corporate StrategyBest Buy Overview – Corporate Strategy
• For 2005, Best Buy will transform 80-110 stores to “Customer Centricity” formats which focus on specific market segments and regional demographics which will feature:
– Tailored assortments
– Increased staffing over traditional store headcount
– Specialized services and offerings
21Stanford Supply Chain Forum 2005
Best Buy Overview – Corporate StrategyBest Buy Overview – Corporate Strategy
• Investing over $130M in technology for 2005 with significant investments in these supply chain areas:
– Merchandising and space management systems– Forecasting and demand planning tools– Support of RFID vendor mandates and infrastructure– Call center and customer support enhancements– Supplier Innovation Initiatives including CPFR
• Select locations will also be retrofitted with a Magnolia “store-within-a-store” section, including San Francisco and Costa Mesa
22Stanford Supply Chain Forum 2005
Best Buy Corporate Strategy –Growth and Profitability GoalsBest Buy Corporate Strategy –Growth and Profitability Goals
• Achieve Revenue Growth Objectives– Double current revenue to achieve $50 billion by 2010
• Achieve 7X7 Target– Achieve 7% operating profit by the end of FY 2007
(March 2006 – Feb 2007)
• Each of these goals presents significant challenges to the Best Buy supply chain organization
23Stanford Supply Chain Forum 2005
Best Buy Corporate Strategy –Supply Chain ImplicationsBest Buy Corporate Strategy –Supply Chain Implications
Some of the Supply Chain Impacts …Impact ofGrowth
• Profitable Growth…Constrained Spending• Agility and Flexibility• Extending Existing Infrastructure
New Required Capabilities
• Flow Through Distribution• Support “Direct to Home Initiatives”• Direct Import – Factory Gate Flow Management
ServiceRequirements
• Store / Shelf Ready Delivery Capability• Direct Store Delivery Initiatives• Reverse Logistics challenges
Impact on• Cost• Inventory• People
• Competing Initiatives focusing limited investment • Financial plans require reductions to fund expansions• New Skills and Training required to support requirements
24Stanford Supply Chain Forum 2005
The Intersection of Strategy and Supply ChainThe Intersection of Strategy and Supply Chain
Supply Chain will help to enable the Customer Centric Supply Chain through the development of capabilities to support:
• Tailored Market Assortment supporting customer segmentation focus
• Speed and Response to enhance customer availability
• Retail Ready and Shelf Ready capability to reduce in-store labor and improve in-stocks
• Lower total cost of ownership
25Stanford Supply Chain Forum 2005
Integration across the Supply Chain LandscapeIntegration across the Supply Chain Landscape
Customer Focused InitiativesDelivered through Retail Operations
ProductFulfillment
SupplierManagement
Merchandisingand Space
Management
Planning andForecasting
26Stanford Supply Chain Forum 2005
A series of interrelated Supply Chain initiatives drive us to our future visionA series of interrelated Supply Chain initiatives drive us to our future vision
• Today we will focus on Product Fulfillment and Supplier Management
Supply Chain/Merchandising: Functional View
Initi
ativ
esTe
chno
logy
Merchandising
• Assortment / Space Optimization
• Price Optimization
• Integrated Promotional Planning
• Retek modules including ASO, Promote
• Rules Based and Demand Based Pricing Optimization (system TBD)
• DemandTec
3Product Fulfillment
• Flow Through
• Direct Import Acceleration
• Lean
• Network Rationalization
• RFID Strategy / Pilot
• Entertainment
• Upgrades to Order Management and WMS systems
Supplier Management
• Supplier Performance Management
• Collaborative Planning and Forecasting
• Supplier Integration and Execution
• Partner Innovation
• Vendor scorecard and portal
• Extension of CPFR Implementation
1Forecasting & Replenishment
4
• Forecast Accuracy• Replenishment/
Allocation• Inventory Optimization
Pilot/CA• PC Forecasting Pilot• Merchandise Financial
Planning• Transition• System Shore-up• Retek modules
including RDF, Promote, RMS (Replenishment, Allocation), AIP, RIO (leased) and Planning
2
27Stanford Supply Chain Forum 2005
Product Fulfillment Initiatives:Direct ImportProduct Fulfillment Initiatives:Direct Import
Our concept of Direct Imports is to compress the supply chain, eliminating redundant steps and closely managing the inbound fulfillment process.Our concept of Direct Imports is to compress the supply chain, eliminating redundant steps and closely managing the inbound fulfillment process.
Represents the Overlap which will be eliminated by direct import
RDC/DDC
BBY ControlledVendor Controlled
StoreDe-consolidationAsia
Factory
Suppliers DC
Redundant Activities
2 Node Supply Chain
Asia Facto
ry
De-Consolidation RDC/DDCStore
…………………BBY DI Supply
Chain
28Stanford Supply Chain Forum 2005
Product Fulfillment Initiatives:Direct ImportProduct Fulfillment Initiatives:Direct Import
• Building “end-to-end” supply chain management capabilities from factory gate to our store
• Integrating supporting technologies• Manage Purchase Orders
• Book and Manage Transportation • Provide Supply Chain Visibility and Event Management
• Providing linkage to Best Buy Merchant Organization for negotiation support and inventory management
29Stanford Supply Chain Forum 2005
Product Fulfillment Initiatives:Physical FlowsProduct Fulfillment Initiatives:Physical Flows
A series of initiatives are being implemented and tested to support growth activities and newly required capabilities
– Overall Network Rationalization to support Customer Centricity store alignment requirements
– Cross-Dock and Flow Through Capabilities
– Enabling efficient “direct-to-home” capabilities for major appliances and consumer electronics
– Increasing consolidation and DC by-pass
– Reductions of vendor to store direct shipments
30Stanford Supply Chain Forum 2005
Product Fulfillment Initiatives:RFIDProduct Fulfillment Initiatives:RFID
Best Buy is currently making significant investments in developing capabilities and infrastructure to support RFID for Distribution and Retail applications
Best Buy is currently making significant investments in developing capabilities and infrastructure to support RFID for Distribution and Retail applications
• Developed and released RFID Vendor Mandate to Best Buy’s Top 100 Vendors at the end of August ’04
• Release of RFID Technical requirements to Top 100 Vendors in December ’04
• Investing in Best Buy’s retail and distribution infrastructure to support full production of Pallet and Case tagging of product by May 2007
31Stanford Supply Chain Forum 2005
Product Fulfillment Initiatives:Lean OperationsProduct Fulfillment Initiatives:Lean Operations
Best Buy has initiatives led by the Supply Chain Organization to institutionalize a “Lean Culture” focused on quality and waste reduction
• Lean Events have been conducted across the organization resulting in over $40M in savings for 2004
• Lean initiatives are taking hold as functional organizations train facilitators and integrate Lean behaviors in their organization
• A full slate of Lean Events are planned for 2005 in Distribution and Store Operations
32Stanford Supply Chain Forum 2005
Product Fulfillment Initiatives:EntertainmentProduct Fulfillment Initiatives:Entertainment
Best Buy Supply Chain initiatives to support Entertainment distribution across Music, Video and Games will focus on initiatives focused on improving in-store selection and cost reduction
• Vendor Managed Inventory capability to support direct to store delivery
• Implementation of revised capabilities to improve overall distribution, assortment and selection of music integrating syndicated data and micro-market demographics
• Improvements in returns and reverse logistics capabilities
33Stanford Supply Chain Forum 2005
Supplier Management InitiativesSupplier Management Initiatives
Best Buy is seeking to forge enhanced capabilities with suppliers across a number of initiatives
• Supplier Performance Management• Development of shared metrics and scorecards
• Collaborative Planning and Forecasting (CPFR)• Expand sharing of inventory and movement data to improve
in-stocks, reduce inventory and returns
• Supplier Integration and Execution/Partner Innovation• Seeking opportunities to jointly improve service, product cost
and quality through innovative shared initiatives
34Stanford Supply Chain Forum 2005
Enabling the Supply Chain Strategy with “vanilla” technologyEnabling the Supply Chain Strategy with “vanilla” technology
Supply Chain Technology
• Import Enablement• Retail Suite• Supplier Integration• Vehicle Routing• Supply Chain Event Management
New Capability Design • Redesigned or improved Process Designs• Overall Supply Chain Capability Blueprint• Cross Capability / Organization Requirements
Skills and People Development
• New or Revised Job Requirements• Technology Skill Focus• Revised career progression and success models
Integration of Innovation
• Focus on interdependent / cross-functional capability design across:
– Merchandising– Inventory Planning and Forecasting– Supplier Integration– Core Product Fulfillment areas including Transportation,
Warehousing, Reverse Logistics
35Stanford Supply Chain Forum 2005
Tracking Performance:Shared metrics across all initiativesTracking Performance:Shared metrics across all initiatives
• Customer Availability• Perpetual Inventory Turn (Stock Turn)• Supply Chain % of Sales• Forecast Error• Inventory Growth % to Sales % Growth• Forward Days of Cover (DOS)
• Stores• DC
• OTRQ (On Time Right Quantity)• DC Cost / Outbound Unit
36Stanford Supply Chain Forum 2005
Alignment Challenges – Keys to SuccessAlignment Challenges – Keys to Success
• Executive Alignment
• People
• Business Knowledge
• Internal and External Factors
• Operating Systems
• Corporate Strategy
37Stanford Supply Chain Forum 2005
Moving ForwardMoving Forward
• Insuring Success
• Flexibility
• Mid-Year / Mid-Strategy Corrections
• International Focus
• Investments - Capital, People and Technology
• Maintaining Focus