introducing the ecr road map dr paul chapman cranfield school of management

Introducing the ECR Road MapIntroducing the ECR Road Map

Dr Paul Chapman

Cranfield School of Management

The ECR Road Map

Call to Action

2. Map &Measure

4. Develop Solutions

5. Implement

6. Evaluate

1. Plan

3. Analyse

Source: Beck, A., Bilby, C.A.L., Chapman, P.A. and Harrison, A., (2001) Shrinkage: Introducing a Collaborative Approach to Reducing Stock Loss in the Supply Chain,

ECR Europe: Brussels.

The ECR Road Map

Call to Action

2. Map &Measure


5. Implement

6. Evaluate

1. Plan

3. Analyse

Call to Action – 1 pagerForegone Income Additional Costs

• Sell more…

• …more often…

• … at higher margin

• Variable costs:

• Fixed costs:

• Others:

Sales opportunity = € Cost opportunity = €

Scope:

Call to Action - Example

Foregone Income Additional Costs• Sell more…

– Wider product range– More store locations

• …more often…– OSA– Frequent ordering– Increase footfall

• … at higher margin– Trade up shoppers– New product lines

• Reduced Shrink• Reduced expenses

– Fixtures

• Less Inventory

Sales opportunity = €15m Cost Saving = € 2m

Scope = Hot product lines / all stores

The ECR Road Map

Call to Action

2. Map &Measure


5. Implement

6. Evaluate

1. Plan

3. Analyse



90%

100%

Number of SKUs

Cu

mu

lati

ve L

osse

s

8% of SKUs account for 30% of loss

20% of SKUs account for 50% of loss

Concentrate on ‘Hot Products’

0%

10%

20%

30%

40%

50%

60%

70%

80%

Project Charter – 1 Pager• Which Products?

• Process Scope (from where to where?)

• Performance measures and improvement target– Shrinkage - ?? %

– Sales + ??%

• Time Table– Start date

– First results

– Project completion

Project Charter – 1 Pager

• Which Products?– Hot Products

• Process Scope (from where to where?)– Store operations in hot stores

• Performance measures and improvement target– Shrinkage - 50 %

– Sales + 20%

• Time Table– Start date now!

– First results next week

– Project completion 3 months

Board of Directors(Shareholders)

Colleagues

Logistics Service

Providers

Consumers

Customers

Suppliers

Regulatory/ Governmen

t Bodies

Project

Identify Stakeholders

Stakeholder Analysis – 1 pagerPeople or Groups Affected

Names

Level of Com

mitm

ent

Enthusiastic Support

Help It Work

Compliant

Hesitant

Indifferent

Uncooperative

Opposed

Hostile

The ECR Road Map

Call to Action

2. Map &Measure


5. Implement

6. Evaluate

1. Plan

3. Analyse



Distribution Node

Store

Tesco DC, Hungary

Gillette Pack Centre, UK

Gillette DC,Hungary

Tesco store, Hungary

Supply Chain Overview

Break seal in yard

Back lorry on to dock

Unload pallets on to dock

Check number of pallets

Attach pallet label

Move pallet to warehouse location

Check pallet references

Receive products

Put away in warehouse

Pick order then marshal pallets

Load pallets into lorry

Dispatch to CarrefourDist. Ctr

Supply chain process hierarchy

Supplier DC

Retailer DC

Retailer Store

Supply Chain Site Process Steps

Map Process Detail

Lorry Arrives

Check Paperwork & Seal

Unload Delivery

Sign for delivery

Close & Seal Lorry

RetailerDC

SupplierDC

2

1

2

1 3

2

1 3 Retailer Store

Measure Basic Inputs and Outputs of Every Site

The ECR Road Map

Call to Action

2. Map &Measure


5. Implement

6. Evaluate

1. Plan

3. Analyse



FMEA: Risk Assessment

• Step 1. Identify the failure modes in each step of the process– In your group brainstorm for 1 minute per step

– Capture every idea on a separate PostIt Note

• Step 2. Score each failure mode– Use the S / O / D scoring scale

S = severity

O = likelihood of occurrence

D = likelihood of detection

• Step 3. Brainstorm the causes of the highest scoring risk– Use the fishbone diagram

Risk Assessment Table – 1 pager

Process StepPotential Failure

Mode(s)Potential Effect(s)

of Failure S O D RPN

Risk Analysis Scoring

S

1 Single item

2 Case / inner pack

3 Crate / shipper carton

4 Pallet / dolly

5Lorry load

O

1 Yearly or less

2 Monthly

3 Weekly

4 Daily

5Hourly

D

1 Detectable prior to event

2 Detect as it happens

3 Detect at end of day

4 Detect at end of period

5Not detectable

FMEA ExampleProcess Step

Potential Failure Mode(s)

Potential Effect(s) of Failure S O D RPN

Goods moved to secure store-

room

Key is lostStore goods in hall

2 3 1 6

Lock Broken

Free access 2 1 1 2

Door not locked

Free access 2 5 4 40

No room in store- room

Store goods in hall

2 4 3 24Measures EffectMeasures EffectSeveritySeverity

Measures Failure & EffectMeasures Failure & EffectOccurrenceOccurrenceMeasures FailureMeasures FailureDetectionDetection

Fishbone Diagram

• Visual way to represent the relationship between a failure mode and possible causes

• Every failure mode will have several causes

Failure mode

People Materials

Machines Methods

Fishbone Diagram – 1 pager

Door not locked

People Materials

Lock broken

Don’t care, not important

Machines Methods

Unclear instructions

Lost key

Forgot

Key holder on holidayLate delivery to store

Other jobs took priority

Fishbone Diagram Example

Analysis Summary

Process StepPotential Failure

Mode(s)

Potential Effect(s) of

FailureS O D RPN

Goods moved to secure store-

room

Door not locked Free access 2 5 4 40

No room in store- room

Store goods in hall 2 4 3 24

Door not locked

1. FMEA

2. Fishbone

The ECR Road Map

Call to Action

2. Map &Measure


5. Implement

6. Evaluate

1. Plan

3. Analyse



Action Planning

Improvem

ent / Potential O

pportunity ($)

High

Low

Slow/Hard Fast/Easy

Ease of ImplementationChange Project

QuickWin

MajorInitiative

The ECR Road Map

Call to Action

2. Map &Measure


5. Implement

6. Evaluate

1. Plan

3. Analyse



Been There, Done That?

Attributes of Poor Projects

Attributes of Good

Projects

1. List the attributes of projects you have worked on

2. Highlight the key differences between poor projects & good ones

ECR Road Map Principles

• Collaborate and engage all stakeholders• Focus effort on the processes: Products /

Information / Money• Identify greatest oppportunities then target root

causes• Remove the opportunity for loss or error• Evaluate & learn

ECR Road Map Benefits

• Ensures the right resources and people engaged• Better and more sustainable results• Less daunting• More cost efficient• Higher probability of success• Quicker to implement• Lessons can be reapplied to other problems

The End

(or the beginning ….)

introducing the ecr road map dr paul chapman cranfield school of management

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