Improving competitive performance by applying a LEAN approach in an end-to-end retail value chain
Situation at the start
The client is a major retail chain in France. They wanted to create a sustainable and differentiating added value for customers.
The challenge
Increase service levels and product On-Shelf availability without negative impact on financial results
The goal
The Supply Chain Director needs to increase competitiveness by driving the optimum service/cost level to positively contribute to the bottom-line results, ensure that the company is ready for future business opportunities, build a Supply Chain recognised for excellence by clients, partners and stakeholders, and build a relationship of trust and collaboration with partners to achieve more common goals.
Putting strategy into action
« Boosting performance by acting on Value, Flow, Asset and People dynamics»
Together with EFESO Management Consultants , a plan was built for a project that would last 18 months and would involve 3 manufacturing sites, 19 DC’s and 4 stores. The team deployed VSM which in this scope was a novelty to the retail industry. Working closely together the team described current and ideal state. In the process of mapping the current state a number of losses were clearly identified by looking at activities that did or did not add value. The second benefit of the VSM was the achievement of a level of knowledge and collaboration required to realise the future state in the end-to-end value chain that had never been attained before in the company.
Deliver concrete results
« Improving your results today, securing your results for tomorrow »
Thanks to the use of the VSM approach 5 areas were defined across the full logistics chain. The project teams realised the following results:
- Optimising physical flows: 7% reduction in stocks, 1-2% reduction in transport cost
- Dynamic minimum order levels : reduction of inventory by 2 days, cost reduction of 10% in joint operation of supplier and retailer
- 7% increase in OSA for a particular product group.
Additionally, as a result of the increased collaboration, there were environmental results:
- due to a more optimal supply route CO2 emissions were reduced by 33%
- supply trucks drove 10.000 KM less than before
- the fleet of trucks was reduced by over 800 units
Due to the success the client has decided to take this approach further into the organisation and to other suppliers to increase service levels and customer satisfaction even more. The project ROI was 5.4 to 1.
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