caling The Benefits of Upstream Integration estlé and the Global Upstream Supply Initiative GUSI)
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1 caling The Benefits of Upstream Integration estlé and the Global Upstream Supply Initiative GUSI) ony Fitzhugh estlé Zone Europe esupply Chain Coordinator trasbourg, EUROLOG 2006, June
2 Today s Objectives To raise awareness of the GUSI initiative and to stimulate interest across peer manufacturers & suppliers To demonstrate how Nestlé is working today with suppliers & other manufacturers to develop and implement upstream collaboration programs based on scaleable industry standard solutions To help you identify what the next steps could be for your company
3 Agenda Overview Nestlé SA Upstream Integration What Is It? Global Upstream Supply Initiative Nestlé Experience Crown Implementing & Roll Out Q & A
4 Nestlé SA Nestlé with headquarters in Vevey, Switzerland was founded in 1866 by Henri Nestlé and is today the world's biggest food and beverage company. Sales at the end of 2005 were CHF 91 bn, with a net profit of CHF 8 bn. We employ around 250,000 people and have factories or operations in almost every country in the world.
5 Nestlé Brands Confectionery Nestlé, Crunch, Cailler, Galak/Milkybar, Kit Kat, Polo, Smarties, Butterfinger, Aero, Baby Foods Nestlé, Nan, Lactogen, Beba, Nestogen, Cerelac, Neslac, Nestum, Guigoz, Good Start Dairy Products Nestlé, Sveltesse, La Laitière, La Lechera, Ski, Yoco, Svelty, Molico, LC1, Chiquitin Ice Cream Nestlé, Antica Gelateria del Corso, Dreyer's/Edy's, Drumstick/Extrême, Maxibon/Tandem, Mövenpick Food Services Chef, Davigel, Minor s Prepared Foods Stouffer s, Lean Cuisine, Hot Pockets, Buitoni, Maggi Beverages Nescafé, Taster s Choice, Ricoré, Ricoffy, Nespresso, Bonka, Zoégas, Nestea, Nesquik, Nescau, Milo, Carnation, Libby s, Caro, Nestomalt, Petcare Purina, Friskies, Fancy Feast, Alpo, Gourmet, Mon Petit, Felix, Dog Chow, Cat Chow, Pro Plan, Purina ONE Bottled Water Nestlé Pure Life, Nestlé Aquarel, Perrier,Vittel, Contrex, S.Pellegrino, Acqua Panna,Levissima, Arrowhead Breakfast Cereals Shredded Wheat, Cheerios, Nesquik,Fitnesse,Fibre 1, Cookie Crisp
6 What is Upstream Integration? It is about optimising the supply chain processes between manufacturers and suppliers by automating the mechanisms for sharing information This will provide increased responsiveness to manufacturing requirements and hence better consumer response
7 End-to-End Supply Chain Model Suppliers Manufacturers Retailers Consumers Procurement Supply Planning Sales & Marketing Upstream Integration Manufacturing Distribution Focus: manufacturing and replenishment plans Raw materials and packaging Focus: consumer demand Consumer unit
8 Expected Benefits Suppliers Manufacturers Retailers Consumers Procurement Supply Planning Sales & Marketing Upstream Integration Suppliers Manufacturing Distribution Better visibility Optimized inventory levels Better supplier service levels Lower integration costs Optimized processes
9 Expected Benefits Suppliers Manufacturers Retailers Consumers Procurement Supply Planning Sales & Marketing Upstream Integration Suppliers Manufacturing Distribution Manufacturers Better visibility Optimized inventory levels Better supplier service levels Lower integration costs Optimized processes Increased retailer responsiveness Maximised production capacity Optimized inventory levels Reduced obsolescence Optimized processes
10 Expected Benefits Suppliers Manufacturers Retailers Consumers Procurement Supply Planning Sales & Marketing Upstream Integration Suppliers Manufacturing Distribution Better visibility Optimised inventory levels Better supplier service level Lower integration costs Optimised processes Manufacturers Increased customer responsiveness Maximised production capacity Optimised inventory levels Reduced obsolescence Optimised processes Retailers Increased on-shelf availability Reduced time to market
11 lobal Upstream Supply Initiative GUSI) Suppliers and Manufacturers working together to: Develop an industry integration solution (Upstream Integration Model) based on: common processes common messages Build momentum and usage The GUSI group started informally in January 2003 and was integrated into GCI in November 2004
12 GCI GUSI Members & Supporters
13 Upstream Supply Chain The Scaling Barrier Business Benefits Current company specific programs S C A L E Create Scale Based on Standards B A R R I E R Low return on investment No sharing of experience High IT/IS Costs No upstream industry standards Lack of common approaches Complexity Global Benefits across the industry Time
14 pstream Integration Model (UIM) Standardises the data interchanges between manufacturers and material suppliers for use in electronic communications. Covers the following business areas: Procurement Material forecasting Inventory Management Despatch, Receipt and Consumption of materials Financial Settlement. Within an overall (manual) Integration Agreement between the manufacturer and the supplier.
15 pstream Integration Model (UIM) The UIM is a modular solution which covers the Plan to cash process for the 2 most used order scenarios: Supplier Managed Inventory (SMI) Traditional Order Management (TOM)
16 pstream Integration Model Building Blocks Manufacturer Process Transaction Supplier Process Integration Agreement Data Alignment Purchasing Conditions Agree on business rules Maintain Master Data Agree Purchasing Conditions Integration Agreement Item Master Data Purchase Conditions Agree on business rules Maintain Master Data Agree Purchasing Conditions Report Inventory Inventory Report Inventory Purchase Order Demand & Supply Signals Gather material requirements Net requirements Consumption Forecast Replenishment Forecast Plan production & supply (instead of Inv. and R. Forecast) Integrate information Purchase Order Confirmation Delivery Plan Confirm delivery Await shipment Dispatch Notification Pick & Pack goods Dispatch, Receipt & Consumption Receipt of goods Check goods Physical shipment of goods Receipt Notification Shipment Goods Receipt Notification Consume goods Consumption Report Consumption Notification Invoice receipt Invoice Create invoice Financial Settlement Create Self billing invoice Invoice confirmation Create Remittance Advice Self billing invoice Invoice confirmation Remittance Notification Invoice receipt Invoice confirmation Payment Notification Initiate Payment Physical Payment Payment receipt
17 Upstream Integration Model (UIM) More information on UIM available on the UIM report published on the GCI website The "Upstream Integration Model" Version 2 A foundation for global upstream supply chain improvements Final version: September 8 th 2004
18 Integration in Practice: The Nestlé Experience
19 Nestlé GLOBE The GLOBE Program was established in 2000 in order to unlock Nestlé's potential by: Leveraging our size as a strength in a rapidly changing environment Uniting and aligning us on the inside to be globally competitive on the outside Enabling Nestlé to manage complexity with operational efficiency The GLOBE Template is a fully configured, documented and tested solution composed of Best Practice Business Process and custom developments ready to be used in the Nestlé Markets.
20 enestlé Strategy To support the B2B vision, Nestlé will proactively build its relationships with emarkets focused on B2B Collaboration to accelerate and drive industry value chain integration and standardization... (source, ebusiness Strategy Blueprint - Executive Summary)
21 Upstream Supply Chain Roll Out Supplier Supplier Supplier Supplier Nestlé Supplier Supplier Supplier Supplier Supplier
22
23 Nestlé & CROWN in Europe 30 sites 26 sites 10 Countries Over 25,000 deliveries per year
24 Our Integration History 2006 Q2 GUSI messages live 2005 Migration to GUSI standard messaging begins 2004 GLOBE implemented in NPPE, esc solution adopted into GLOBE template 2003 Receipt advice and invoice messages implemented (pre GLOBE) 2002 First messages live covering forecast, purchase order and dispatch advice (pre GLOBE) 2001 Crown & Nestle Purina Pet Care (NPPE) begin integration project
25 Nestlé CROWN Project Scope Over 160M cans & 230 M ends managed by exchanging integrated messages (Forecasts/Orders/ CROWN Concarneau Nantes Laon Outreau Perrywood Braunstone Wisbech Parma Dunaska Streda Nestlé Quimperlé Aubigny Wisbech Ijmuiden Castiglione Bük
26 Nestlé & CROWN Project Objectives Key processes review / simplification / harmonisation Message availability Automation of message exchange and integration in to ERP systems
27 Key Processes Review Review planning rules Review lead times and stock management policy bottlenecks & stock policies capacity planning product range planning & mix of goods Re-define goods receipt process Supply Securisation planning distribution Integrate use of scanned data of physical flow. harmonise exchange of information flows of information supply chain discussions simplification
28 Integration Scope Supplier CROWN Nestlé Retailer Information flow C R O W N forecasts / orders acknowledgement dispatch note invoicing / payment N e s t l é barcoded data capture Physical flow
29 Current Status/Achievements Foundations of upstream integration between Nestlé Purina and CROWN have been established Benefits identified though project still in the process of being rolled out Full benefits to be achieved during roll out across Europe
30 Conclusions The project between Nestlé and CROWN has proved the opportunities for upstream integration To scale the benefits across trading partners an industry integration solution should be agreed between companies
31 The Leveraging and Roll-out of GUSI & UIM
32 Implementing GUSI/UIM Number of global companies actively implementing GUSI Unilever, SmurfitKappa, P&G, Nestlé, Crown Europe, IFF, Novozymes, National Starch, Quest, Loders Croklaan, Symrise, Givaudan, Firmenich, etc Approx couplings covering approx. 20 countries world-wide planned for 2006 so far up from 6 pilots last year Major service providers also actively involved CPGMarket, Elemica, etc Implementation Guide published April 2006
33 Implementing GUSI/UIM Implementing GUSI/UIM is not the sole preserve of large companies! Can equally be applied to small organisations - benefits are greater/costs are reduced! Use of well-accepted process and messaging standards will benefit every company (small or large)
34 GUSI/UIM - The Next Steps Based on learnings/success of UIM v2.2, new workstreams are being created: transport & warehousing contract manufacturing portal standardisation e-billing (e-invoicing & e-selfbilling) Output will form UIM v3.0 NB: these are parallel workstreams! Companies should not wait for these to finish before implementing UIM v2.2 - do it now! (UIM v3.0 will be backwardscompatible)
35 GUSI Summary Business models defined Standard messages available Implementation Guide published Companies actively implementing Business Case Published Soon
36 The GUSI Opportunity Scaling usage across our partners Share experience Scaling with more trading partners lower costs and ease of adoption through more standardisation
37 Join The Team!
38 Next Steps The next meeting of the GCI Global Upstream Supply Initiative (GUSI) Team will take place On: 27 June, 2006 Location: Paris Please contact Ruediger Hagedorn, GCI if you are interested in joining the meeting!
39 Thank You
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