Postponement A Competitive Weapon

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Amie Patterson
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1 Postponement A Competitive Weapon Gene Obrock Henkel Consumer Adhesives May 4, th Annual Conference Adam s Mark Dallas, TX 1

2 Our Vision Henkel is a leader with brands and technologies that make people's lives easier, better and more beautiful Henkel Worldwide Founded 1876 Sales 14.2 billion 50,000 employees 125 countries

3 Home Care Personal Care Adhesives, Sealants & Surface Treatment Consumer Industry Quality with Brands & Technologies

4 The landscape has changed... SELLING IS NOT ENOUGH ANYMORE You must assist your customers in becoming better marketers and more efficient operators 4

5 The challenge of low cost globally sourced products, combined with retailers need for differentiation and high service performance, dictates the need for postponement and value added services. 5

6 Evolution of our Customer Relationships Contributes to Retailer s Overall Business success Provide value added services Provide differentiated and low cost products Today Deliver quality products Deliver products Past 6

7 How does your organization view logistics? Strictly a method to ship products Low investments Stand alone operation Strategic weapon Fully integrated processes/systems Critical to being customer-centric Critical to world class customer service 7

8 Postponement allows HCA to leverage today s more complex supply chains by deferring decisions to the last minute. Postponement is no longer just a Manufacturing initiative. Henkel has designed their supply chain and warehouse network to utilize postponement and value added services as a competitive weapon. 8

9 100% Customer Service Data Synchronization EDI, UCCNET Integrated Manufacturing & Materials Management Category Management (Merchandising) Value Added Services Logistics (Warehousing & Transportation) Promotion & Market Analysis Case/Pallet Labeling (RFID) Direct Store Shipments 9 The right people, with right skills, supported by the An right Association tools, of processes Distribution and Professionals systems.

10 Basic Order Flow Customer Supplier Network Customer Enterprise System WMS Logistics/ Transportation Customer P.O. Receive Customer Order Verify Pricing & Quantity Determine Supply & Demand Schedule Order & Transportation Pick & Ship Order Receive Shipment (P.O.) Pay Vendor 10

11 Henkel Order Flow & Value Added Services Customer Henkel Postponement Network WM Logistics Customer P.O. Receive Customer Order Verify Price Only Supply & Demand Schedule Order Pick Order VAS Service X-Dock Products Load Shipment Category Mgmt. Market Analysis Pricing Analysis Promotion Analysis Postponed Merchandising Space Analysis Assortment/Clustering Postpone Transportation Inbound S.C. Visibility 11

12 When designing a Postponed Supply Chain... Identify critical decision points Driven by people and systems Remove traditional boundaries i.e. Sales, marketing, purchasing, material management, manufacturing, distribution, transportation Assign x-functional teams and challenge mind sets to defer decisions Identify system configuration opportunities 12

13 SUPPLY CHAIN SERVICE MODEL SERVICE EXCELLENCE Satisfied Customers IN STOCK SUCCESS FACTORS: Leadership, Attitude, Training, Process, Communication, Data Integrity, Speed Marketing Planning Forecast Accuracy SALES Supplier Performance SOURCING Inventory & Materials Mgmt. Mfg. Capacity Distribution Capacity Transportation SUPPORT SERVICES: Partner Resources, Information Systems, Finance, Customer Care, Legal STOCK OUTS 13 SERVICE CONSTRAINTS Damaged Customer Relationships Lost Sales Cancelled Items Late Shipments Backorders Fines

14 Leveraging postponement and value added services... results in World class customer service - 100% fill - 100% on-time delivery Inventory management - Reduced inventory levels customer & supplier - Ability to serve Globally Neutralize cost impact of last minute changes Improved supply chain management - Use of alerts and event management tools - Improve visibility and decision making - Better execution - Strong performance - Need for coordinated x-docking Culture change - Shared roles and accountability within your organization 14

15 Key Takeaways Understand cost drivers within your logistics network Identify critical decision points within supply chain... And where they take place Integrate - People - Systems - Historical Processes Collaborate with customers beyond a sales single point of contact Be willing to change 15

16 The End 16

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