1. Changing the Game with Your Customers
– A Supply Chain Strategy in Action
ECR Asia Pacific Conference 2008, Thailand
Jeffrey Russell, Accenture /
Metta Siramongkholkarn, L‟Oreal
Copyright © 2008 Accenture All Rights Reserved.

2. In order to drive Consumer Products
companies performance to the next
level, many are adopting a „Game
Changing Supply Chain‟ strategy
- Game Changing Supply Chain -
Supply chain differentiation based on customer
/ consumer behaviour and value to drive top-
line growth
Value
- Performance Optimization -
Focus on service levels by raising the performance bar,
fine-tuning the overall model and collaboration with the
extended supply chain.
- Every Day Great Execution -
Getting the basics right in terms of people process, systems, organisation
and data. Cost optimisation through rationalisation of the cost base
Supply Chain Performance Journey
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3. Effective supply chain strategies form
the basis of competitive advantage and
increase shareholder value
 Developing differentiated channel value propositions
 Improving the ability to meet customer needs and buying behaviour
 Reducing total cost to serve as the level of service provided is varied
between channel segments
 Aligning operations and sales and marketing in the way they treat
customers
 Enabling the organisation to structure resources around segments,
e.g. options to outsource customer service activities for selected
segments vs retain in-house
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4. Typical benefits achieved in FMCG
companies through customer aligned
supply chains
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5. Historically, FMCG companies have
developed a „one size fits all‟ supply
chain that is designed to achieve cost
efficiency
-- Accenture‟s SC Customer Alignment Framework --
Strategy Supply Chain Strategy
Supply Chain 1.0
Product
Demand Market Segmentation Customer Demand Profiling
Generation Segmentation & Portfolio Segmentation & Forecasting
Management
Supply Supply
Supply Network Fulfilment
Replenishment Sourcing
Alignment Optimisation Operations
Strategies Options
Capabilities
Sales & Leadership - Process
Cost to Performance Risk
Foundation Operations Behaviours - Organisation PLM
serve Metrics Management
Planning Culture - Talent
- Technology
5
Copyright © 2008 Accenture All Rights Reserved.

6. Accenture‟s Customer Alignment
Framework provides the structure and
rigor to design „fit for purpose‟ supply
chains for differentiated
customer/product segments
Business Strategy
Strategy
Supply Chain Strategy
Supply Chain 1.0
Supply Chain 2.0
Demand
Supply Chain 3
Generation
Supply Chain 2
Supply Chain 1 Segmentation Market Customer Demand
Product
Product Profiling
+ Portfolio Segmentation Segmentation
Demand
Segmentation Market Management
Customer & Forecasting
Product Profiling
+ Portfolio Demand
Segmentation Segmentation
Market Segmentation Customer & Forecasting
Management Profiling
Segmentation & Portfolio Segmentation
& Forecasting Supply Supply
Management Network Fulfilment
Replenishment Sourcing
Supply Supply Supply Strategies
Network Options
Fulfilment
Optimisation Operations
Replenishment Sourcing
Alignment Supply Supply Strategies Fulfilment
Network Options
Optimisation Operations
Replenishment Sourcing
Optimisation Operations
Strategies Options
Capabilities
Sales & Leadership - Process
Cost to Performance Risk
Foundation serve
Operations
Metrics
Behaviours - Organisation PLM
Management
Planning Culture - Talent
- Technology
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7. Example Supply Chain Re-design “fit
for purpose”
6 – 12 Months
SC
Manager
SC SC SC
Manager Manager Manager
Customer Sourcing / Physical Segment 1 Segment 2 Segment 3
Care Procurement distribution
Customer Customer
Segment 1 Segment 1 Segment 1 Customer Care
Care Care
Sourcing / Sourcing /
Segment 2 Segment 2 Segment 2 Sourcing / Procurement Procurement
Procurement
Segment 3 Segment 3 Segment 3 Physical Physical
Physical distribution distribution
distribution
Challenges :
- multi-skills Supply Chain Managers
- Limit increase of headcounts
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8. Benefits after 1 Year
• Privileged Relation 1 Point of contact between Supply Chain manager
(supplier / retailer)
• Tailor-made Service (especially for Mass Market retailers)
• 100% focus on Service level : Gain 10% in average over 12 months
• Team/talent development : Create succession Plan
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9. Different supply chain models are
more appropriate depending on the
demand predictability and the nature
of the customer relationship
Lean Agile
Loose
Segment 4
Customer Relationship
Segment 3 Transactional
Flexible
„Base Model‟
Agile
Segment 2
Joint
Collaborative Planning
Segment 1
Tight
High Demand Predictability Low
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10. Potential service offerings for
strategic customer group
Potential service offerings to Customer Group:
 Tier 1 strategic importance
 Low relative demand variability
 Demanding behaviour
Trade terms Cash Management
Efficient Assortment / Ranging Standard (prompt) payment
Growth Incentives Accelerated payment
Product Discount - case deals Electronic payment
Checkout Display
Promotional Display Order to Cash
Web ordering
Fulfilment Field sales call
Weekend deliveries Phone / fax
Advance shipment notification EDI
Backhaul Weekend ordering
Ex factory gate / NDC Short lead time
Cross docking EDI invoice
Direct store delivery EFT
Drop trailer e-POD
Operational Integration CRM
Category Management Nominated logistics contact
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11. Differentiation between the stable
and variable components of demand
is a key step to determine fulfillment
setup – managing volumes differently
balances service levels and cost to
serve
- Demand Types - - Fulfilment setup -
Identify what parts of the business can be treated Fulfil through a „lean‟ supply chain configuration:
as fundamentally stable: • Maximum capacity
• Lowest cost
• Stable, predictable demand • Long lead time
• Commoditised or mass market products
• Collaborative customers
Identify what parts of the business are variable Fulfil through a more flexible supply chain:
and truly complex: • Local sourcing and / or finishing
• Variable demand • Short lead times
• Promotions • Variable configurations
• Premium products
• Low visibility customers
Thailand 2006 - indicative stable / variable split Customer C1 Indicative SC alignment
Thailand indicative SC alignment
Customer C1 Indicative stable / variable split
500,000 Stable orders Variable orders
Collaborative
450,000
Customers Customers
400,000
Cases ordered
350,000
300,000
Variable
Variable Collaborative = 53%
250,000 (40%)
(42%)
200,000
= 59%
150,000
Stable
Stable
Demanding
100,000
Stable
/ Efficient
(58%)
(60%)
50,000
-
= 41% Lean = 27% Agile = 20%
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12. So in summary, consumer goods
companies need to change the game
while continuing to deliver everyday
execution
- Game Changing Supply Chain -
Supply chain differentiation based on customer
/ consumer behaviour and value to drive top-
line growth
Value
- Performance Optimization -
Focus on service levels by raising the performance bar,
fine-tuning the overall model and collaboration with the
extended supply chain.
- Every Day Great Execution -
Getting the basics right in terms of people process, systems, organisation
and data. Cost optimisation through rationalisation of the cost base
Supply Chain Performance Journey
Copyright © 2008 Accenture All Rights Reserved. 12