SUPPLY CHAIN MANAGEMENT FOR EFFICIENT ... - ecr-uvt

SUPPLY CHAIN MANAGEMENT
FOR EFFICIENT CONSUMER
RESPONSE
SYMPOSIUM
11-12 JUNE 2010
TARGOVISTE

SCM 4 ECR SYMPOSIUM
PROJECT MANAGEMENT IMPLICATION IN
DEVELOPMENT AND
LAUNCH PROCESSES OF A NEW PRODUCT IN CG
INDUSTRY
Corina DINCA
Virgil POPA

© SCM 4 ECR Corina Dinca, Virgil Popa
“Competing with Everyone from Everywhere for Everything”
Harold SIRKIN, Globality
The rise of both BRIC group( BRAZIL, RUSIA, INDIA, CHINA) and Middle East opposes to the delay
that USA and EUROPE are facing
• Butterfly effect occurs because the today world is more interconnected, more
independent it accentuates its globalized status”.

Need to change
We need some changes, to certain levels, including also systems, practices and
philosophies. Some of the changes are necessary in industry (for example the
application of some global standards), but some could be bilateral affaires between
some commercial partners.
Each company needs to learn what “works for itself”.
Several priorities:
• We need to develop a common vision of the value created by disseminating the
information through all the participants to the value chain. This fact implies the
exact definition of the way in which value can be created both for the
manufacturers and for retailers. A win in information is a win-win strategy, but in
order to succeed, the whole chain must agree on its importance.
• We must agree on what type of information can be disseminated deliberately and
what information is secret.
• We need to develop a frame, a schedule that must be approved in industry for the
data that has to be standardized.
• Companies must be prepared to exchange the basic standards, in fact the data,
freely or in return to an available rate of costs recovery. Common standards will
help you minimize the costs of sharing data.
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• Once we have accepted that the value doesn’t mean rude information, but
analytical capabilities linked to it, we should not regard the share of data as a
revenues engine.
• Security controls must be placed on each platform of information. Trust in
companies, between them, between the companies and the customers, will be
improved only when the information is shared properly.
• The start is simple. Pilots must set up on the available information flows and on
collaboration flows and they must start with the known data and then regard the
unknown data flows.
It is the right time for a radical improvement to the access toward the
information value chain.
© SCM 4 ECR Corina Dinca, Virgil Popa

The new concept development (NCD) construct is a
relationship model, not a linear process.
INFLUENCING FACTORS (THE ENVIRONMENT)
-corporation’s
organizational capabilities
-customer and competitor
influences: Porter’s “five
forces”: (customers,
competitors, new
entrants, suppliers, and
industry rivalry)
-outside world
-depth and strength of
enabling sciences and
technology.
“Enabling” is not the same as “mature”. It is the point when the technology is developed enough
to build it into a manufactured product or regular service offering. Enabling technologies
usually provide some degree of enhanced utility, cost avoidance, value, or quality
improvement for the customer.
Corina Dinca, Virgil Popa

THE ENGINE (LEADERSHIP, CULTURE, AND BUSINESS
STRATEGY)
Leaders demonstrating in every decision and action that innovation is
important to their company.
Encouraging purposeful evolution and encouraging employees to try
new things
Developing real relationship between marketing and technical people
Generating customer intimacy by encouraging their employees to
interact closely with customers.
Engaging the whole organization in understanding that innovation is
the fundamental way that the company brings value to its customers.
Continuing to value the individual and set an environment that is
conductive to high motivation.
OPPORTUNITY IDENTIFICATION
Opportunity identification defines the market or technology arena the company may want to participate in and
allocate its resources.
OPPORTUNITY ANALYSIS
Extensive effort
Opportunity
identification
Customer assessment
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Strategic framing
Market segment assessment.
Competitor analysis.
Corina Dinca, Virgil Popa

IDEA GENERATION AND ENRICHMENT
The element of idea generation and enrichment concerns the birth, development, and maturation
of a concrete idea.
Ideas are built up, torn down, combined, reshaped, modified, and upgraded.
IDEA SELECTION
Limited information and understanding that are available early in product development makes
idea selection less rigorous in FFE than in the NPD portion, since many ideas must be allowed to
grow and advance.
CONCEPT DEFINITON
Concept definition is the final element of the new concept development model. This element
provides the only exit to the NPD or technology stage gate (TSG)
Guidelines for gatekeepers :
• Objectives
• Fit of the concept with corporate and/or divisional strategies
• Size of opportunity, such as financial impact
• Market of customers needs and benefits
• A business plan that specifies a specific win/win value proposition for value chain
participants
• Commercial and technical risk factors
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Corina Dinca, Virgil Popa

Feasibility check
Capability check

Efficient Products Introductions – the EPI Wheel
8
ASSESS
LAUNCH
IMPACT ON
CATEGORY
CATEGORY
MANAGEMENT
PROCESS
1
COLLATE
IDEAS
2
FINALISE
CONCEPT AND
FEASIBILITY
7
EVALUATE
THE JOINT
LAUNCH
6
JOINTLY
COMMUNICAT
E
TO CONSUMER
5
JOINT
EXECUTION
OF LAUNCH
PLAN
3
PRODUCTION
AND MARKET
PLAN
4
PLAN
JOINT
LAUNCH
Source : Courtesy of Ernst & Young
Efficient Product Introductions - The development of value-creating relationships
© SCM 4 ECR Corina Dinca, Virgil Popa

EPI is a comprehensive approach has the greatest potential to create brand and category value as
well as cost savings, but it involves close collaboration between thetrade partners which may or
may not be realistic.
When is a product new?
One reason is that innovation is multi-dimensional-it depends on your perspective.If
you are a manufacturer, for example, you might see it like this:
a new features, changed features and new technology;
a new target users;
a new concept, new marketing mix, new answer to an existing need or to a latent need;
a new organisation/management.
ECR identified Efficient Product Introductions as one of the four Efficient Consumer
Response strategies. The other three pivotal consumer response strategies are:
Efficient Store Assortment, Efficient Replenishment and Efficient Promotion.
CONSUMER VALUE =
( Quality
) ´ ( Trust
( Response
) ´ ( Variety ) ´ ( Service
time ) ´ ( Price )
)
© SCM 4 ECR Corina Dinca, Virgil Popa

The cost of product introductions failures is high .
"Minimum costs": this is money that must be spent on any product introduction. Regardless of the type of product or size
of company, certain minimum activities will have to be performed.
"Additional costs": On top of these minimum activities, companies may choose to invest in additional activities. Many
of the costs thus incurred involve money spent on communicating to the consumer, including advertising and promotion.
For manufacturers such costs normally represent a major share of the total cost of new product introduction.
Activities linked to New Product Introductions
Main Phases Main Activities/Costs Minimum Additional
DEVELOP Market potential analysis ü
Develop prototype for testing /
ü
Market concept test I Product positioning /
ü
Refined market potential analysis I Financial assessment ü
Marketing plan I Trade marketing plan I Merchandising plan
Pilot production run and quality testing
Financial assessment
Discuss high level category plan elements
ü
ü
ü
ü
LAUNCH
Presentation of new product and internal validations
Discuss and agree on new product introduction element:
-Pricing, Distribution, Advertising, ..
-Determine joint promotional plan
ü
ü
Implement coding within system EAN
In store handling activities
Store visits
Advertising and promotions development
Actual advertising
Actual promotion
Actual sampling, etc...
ü
ü
ü
ü
ü
ü
EVALUATE
Asses new product launch (internal)
Discuss evaluation
ü
ü
© SCM 4 ECR
Total costs split into Minimum and Additional

LONG TERM VALUE
Brand/category value generation
© SCM 4 ECR Corina Dinca, Virgil Popa
Innovation
New Product Introduction
BUILT BRAND/
CATEGORY EQUITY
LONG TERM
GROW VOLUME
INCREASE EFFICIENCY
DEVEPLOP BRAND/MARKET
CATEGORY
PENETRATE MARKET
CATEGORY
ENTER NEW SEGMENTS
BRANDS/CATEGORY
CONVERT
NON-USERS
INCREASE
FREQUENCY
ATTRACT
RIVALS’
CUSTOMERS
REDUCE
COSTS
IMPROVE
PRODUCT
PRICE
OFFER
IMPROVE
SALES
MIX

The six improvement areas evaluated
on-going
not always suggested
low difficulty
high difficulty
Planning product
promotions jointly
Aligning new products to
category plans
Developing products
jointly
Distributing products
quickly and efficiently
Evaluating new products
jointly
Financial impact
Implementing in-store
planning promotions
jointly
Revenues
increase
Costs savings
Capital reduction
Courtesy of Ernst &Young
1. Planning product promotions jointly
2. Distributing products quickly and efficiently
3. Implementing in-store product promotions jointly
If both trade partners are involved in implementing the promotional plan
and making rapid changes if necessary marketing mix
efficient consumers more aware more likely to try them.
Volume
Revenue
© SCM 4 ECR Corina Dinca, Virgil Popa

© SCM 4 ECR Corina Dinca, Virgil Popa
4. Aligning new products to category plans
Where a category management process already exists, companies can achieve both revenue and
cost advantages by linking new product introductions into the process.
While manufacturers are already thinking in terms
of category and category planning, they are not
necessarily sharing their thoughts or aligning their
plans with those of retailers.
medium difficulty.
5. Evaluating new products jointly
Agreed launch
objectives earlier on in
the process.
-joint analyze on the role
of advertising, promotion,
packaging, and
positioning of the product
on the shelf and in the
store.
quick response
adjusting the marketing mix
withdrawing the product quickly
Increase revenue, save
costs, working capital
,consumer value

© SCM 4 ECR Corina Dinca, Virgil Popa
6.DEVELOPING PRODUCTS
JOINTLY
High difficulty
Traditionally
Manufacturers who develop
new products
R&D
Competitive
sensitivity
OUTSIDERS
(Retailers)
Other situations
Manufacturers
(niche manufacturers)
NO LARGE R&D
OUTSIDERS
(Retailers)
Low risk
Lower associate costs
& capital
Increased
customer
satisfaction
Improved
product
quality
High

© SCM 4 ECR Corina Dinca, Virgil Popa
A project is a temporary endeavor, having a defined beginning and end (usually
constrained by date), planning deliverables, undertaken to meet unique goals and
objectives.
Project management is the discipline of planning, organizing, and managing resources
to bring about the successful completion of specific project goals and objectives.
When a company reaches a strategic inflection point when his old strategy does not give the
expected results, in an environment where risk IS measurable, but uncertainty NOT, any
performing company chooses the strategic choice of a calculated risk and DOEN’T DO the
mistakes below:
1. Doesn’t dismiss talented people
2. Doesn’t reduce the budget dedicated to technology
3 Doesn’t reduce its assumed risk
4. Doesn’t change performance indicators
5. Doesn’t stop the product development
6. Doesn’t stop the innovation process
Launch a new wine
on French market

© SCM 4 ECR Corina Dinca, Virgil Popa
Vision
The most important mutation that wine demand
has suffered was the switch from a natural and
daily consumption to a hedonistic pleasure. 21th
Century is characterized by CHOERENCE:
- Coherence with history
- Coherence with producers’ and consumers’
experience and potential
- Consistency with market logic
- Product’s consistency: taste, visual and
perceived image

© SCM 4 ECR Corina Dinca, Virgil Popa
Mission:
Mission statement defines the general goal to
exist or to enable the business. It serves as a
guide in times of uncertainty. The mission can
remain the same for several decades if it has
been properly formulated.
Planning is undoubtedly the most important phase
of our project. We reject skepticism when we
mention these pro-planning steps. So we plan :
- To better understand our project
- To understand the most effective way to enforce it
- To communicate exactly how to approach our
customers and consumers
- To actively maintain the flow of progress
- To keep the direction
50% fulfillment of actions DOES NOT MEAN 50%
fulfillment of the project
We do not choose to plan actions, but
"deliverables" - the final products of our project,
whether tangible or intangible

© SCM 4 ECR Corina Dinca, Virgil Popa
Organization values
Values are key priorities in the culture of the organization, including the factors
determining the priorities of its members and how they truly act in the organization.
The three constraints that project management needs to master are presented in the
following scheme:
Destroying values

© SCM 4 ECR Corina Dinca, Virgil Popa
Main objectives :
Specific objectives:

Microsoft Project is a robust tool for projects taking into account the flexibility an
ease of use you need for effective project management.
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© SCM 4 ECR Corina Dinca, Virgil Popa

© SCM 4 ECR Corina Dinca, Virgil Popa

© SCM 4 ECR Corina Dinca, Virgil Popa
Launched in January 2002, GSMP (Global Standards Management Process) is an
"engine” a process guided by users’ wishes. First facing the Business requirements
phase and then the Technical Development phase it has achieved a standard
specification for data synchronization.
For an unified approach Global Commerce Initiative (GCI) with the consulting
company AC Nielsen has developed a global classification system applicable to all
categories of commercial products. This classification system allows linking to
different schemes:
Article Name 1 2 3 4 5
Brick code 1000000126
Brick name
wine
Attribut 0000010173 0000010055 0000010119 0000010070 0000010012
Attribut name Quality Colour Variety Country Region
Value code 0000011001 0000010219 0000010766 0000010318 0000010092
Value name AOC Red Pinot Noir France Burgundia

Therefore, before implementing RFID tags and readers, all retailers and their suppliers
should adopt the vision of the Global Data Synchronization (GDS) promoted by the
Global Commerce Initiative (GCI) and EAN.UCC. EAN.UCC, standardization
organization for retailers, has developed not only a single standard for identifying
products, Global Trade Identification Number (GTIN), but also infrastructure, Global
Data Synchronization Network (GDSN) to allow retail industry share data easier. Fully
implemented, will allow GDS to access detailed data on any provider’s products
anywhere in the world by any retailer anywhere in the world, through a network database
maintained locally called GTIN on pools.
Electronic product code (EPC)
01 . 0000A89 . 000 I 6 F . 00I69DC0
Header Domain manager Class Serial
8 bits 28 bits 36 bits 24 bits
Determines the next
series of numbers
Identifies the company
or entity responsible
for maintaining the
next number
Used to identify a class
of objects, which is a
product group
Unique identification
of the object
Indicator
character
EAN.UCC prefix Product number Control character
© SCM 4 ECR Corina Dinca, Virgil Popa

For the first time, RFID offers
complete control over the entire flow
of goods. Equipped with a unique
fingerprint, each product can be
recognized and pursued at any point
along the route from producer to
consumer.
Production Packaging
Final Product
Distribution center for goods between warehouses
Point of sale
Customer Information
Purchase / Payment
Complaints / exchange goods
Forecasting / planning supply.
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Corina Dinca, Virgil Popa

Our ambition should be based on how well we stand up
and mainly on how quick we rise up
Thank you for your attention !
I feel very pleased because I “downloaded”
myself today , and in the meantime I am ready
to fulfill myself again and next time I will
perform better because I will have something
NEW to say!
© SCM 4 ECR Corina Dinca, Virgil Popa