CGT Inside News - 05/24/2006

Industry Execs Convene in NYC to Discuss Demand Driven Best Practices

May 24, 2006- Earlier this week, consumer goods executives convened at The Coleman Center in New York City to discuss pain points and lessons learned at the second CGT Connects event, titled "Best Practices for Becoming Demand Driven". To kick off the event, Noha Tohamy, Principal Analyst for Forrester Research, defined the framework of supply network influence and discussed best practices of building internal, customer and supplier influence in supply chains. Mike Mastroianni, VP of North American Planning, Reliability and Operations for Campbell Soup, then shared the story of his company's journey to become a demand-driven organization, how it is now better able to sense and react to demand signals.

Following the presentations, the group of 15 executives from leading consumer goods firms participated in a roundtable discussion. The following topics were spotlighted:

• Companies are struggling with systems integration and need to find ways for disparate systems to better communicate with one another.
• One of the biggest challenges around becoming demand driven is collaboration, both internally amongst various departments and externally with trading partners and suppliers.
• With sales forecasts being a critical element to becoming demand driven, companies are beginning to provide incentive to sales team members depending on the accuracy of their forecasts.
• Senior sponsorship is imperative in any business process change.
• It is important to benchmark your company externally, to help create measures for success and areas to improve upon.

 For a more in-depth recap of this event, please read the July issue of Consumer Goods Technology.

Adidas Steps Up Performance with Business Intelligence

To achieve top performance, adidas Group is providing its sales force with a software infrastructure that improves customer service to accounts and ensures consistent global tracking of the company's overall performance. The adidas Group selects Business Objects, a provider of business intelligence (BI) solutions, as its business intelligence standard in the United States. "Business Objects has made our sales force, and our entire business, much more agile," says Tim R. Oligmueller, sales automation manager for adidas Group. "With the business intelligence infrastructure, we can be confident we have consistent, accurate information when we walk into the board room. We will continue to upgrade and explore opportunities that will give us even faster access to the information that matters most to our business." With the software, the sales team has the ability to track immediate information on product movement within the stores. Standardized reporting from Business Objects helps adidas stay on top of trends and close the sale. The business intelligence solution allows the marketing department to monitor trends and inform customers while they are stocking products, and provides accurate information to deliver reliable forecasts for potential demand and prediction of future sales. The finance department monitors commission payments to its sales force, making the latest commission numbers available via an intranet powered by BusinessObjects Web Intelligence. Traveling. Account managers also have access via wireless PDA's to commission reports, critical account and sales data, as well as immediate and accurate information on product availability.

Kimberly-Clark Connects 57,000 Employees Worldwide

Kimberly-Clark (K-C) Corporation, a global health and hygiene company, selects Avaya as its provider of global telephony applications and communications network services. Under the terms of the agreement, K-C will use Avaya MultiVantage Communications Applications -- a suite of Internet Protocol (IP) telephony, contact center, messaging and mobility applications -- to connect more than 57,000 employees worldwide. Migration to this new communications network will take place over the next three years. This multi-year transition plan will leverage K-C's existing IP infrastructure to assure there are no business disruptions. In addition, this approach allows K-C to lower the cost of operating its communications network, while at the same time introducing new communications capabilities. "We are always looking to enhance the capabilities of our global communications network and to improve the economies of scale when it comes to connecting our disparate worldwide workforce," says Randall Borree, IT Services Personal Productivity and Communications director at K-C. "By integrating Avaya's telephony services with the business communications applications we use across our enterprise, we believe we will enhance the functionality of our global communications network." Once completed, the Avaya suite of services will offer K-C the opportunity to integrate real-time voice with other key business communications applications, such as those from Microsoft and SAP.

Wolseley Deploys Transportation and Delivery Management Solutions
Wolseley (Group Services) Limited selects The Descartes Systems Group Inc.'s solutions for logistics planning and execution for its UK operations. Wolseley is the world's largest specialist trade distributor of plumbing and heating products and a supplier of building materials to professional contractors in North America, the UK and Continental Europe. After a comprehensive pilot and evaluation study, Wolseley selected Descartes' transportation and delivery management solutions for customer delivery reservation, delivery route planning and vehicle dispatch within the UK. Descartes' solutions are designed to help organizations, like Wolseley, for whom timely delivery is a key service component, reduce operational costs and improve customer service.

Anheuser-Busch Buys Rolling Rock for $82 Million
To expand its portfolio of products, Anheuser-Busch purchases the Rolling Rock brands from InBev USA, the U.S. subsidiary of Belgian-based InBev, for $82 million . Anheuser-Busch acquires the Rolling Rock brands and recipes with the transaction, and will now start to work with the existing Rolling Rock wholesaler network and Anheuser-Busch wholesalers to define plans for the future. Anheuser-Busch will begin brewing Rolling Rock and Rock Green Light in August using the brands' same time-honored recipes, maintaining Rolling Rock's craftsmanship and heritage that its fans expect and appreciate. Internationally, Rolling Rock will continue to be sold in the United Kingdom and Ireland. "We have an ideal opportunity to grow this historic brand," says August A. Busch IV, president of Anheuser-Busch Inc. "This beer is not like others, and its consumer following is equally distinctive. We live in a diverse world where consumers are hungry for variety. Acquiring Rolling Rock enables us to reach a new audience and to continue building our broad portfolio of products that meet the wide-ranging needs of consumers."

Sara Lee Set to Finalize Branded Apparel Spinoff
Sara Lee Corp., a maker of consumer products, completes a regulatory filing for the previously announced spinoff of its branded apparel business, initiating the final phase necessary to create a new company. The business, called Hanesbrands Inc., has about $4.7 billion in annual sales and includes brands such as Hanes, Champion and Playtex. The spinoff will occur as scheduled between June and September, with Sara Lee shareholders getting all Hanesbrands outstanding shares at a distribution ration to be determined. Sara Lee will not retain a stake in Hanesbrands and instead will focus on its core food, beverage, and household and body care businesses.

Nike and Apple Team Up to Launch Nike+iPodGlobal

Nike and Apple partner to bring the worlds of sports and music together with the launch of innovative Nike+iPod products. The first product developed through this partnership is the Nike+iPod Sport Kit, a wireless system that allows Nike+ footwear to talk with your iPod nano to connect you to the ultimate personal running and workout experience. "Nike+iPod is a partnership between two iconic, global brands with a shared passion for creating meaningful consumer product experiences through design and innovation," says Nike CEO Mark Parker. "This is the first result, and Nike+iPod will change the way people run. Nike+iPod creates a better running experience. We see many more such Nike+ innovations in the future." The new Nike+Air Zoom Moire is the first footwear designed to talk to iPod. With the Nike+ footwear connected to iPod nano through the Nike+iPod Sport Kit, information on time, distance, calories burned and pace is stored on iPod and displayed on the screen; real-time audible feedback also is provided through headphones. The kit includes an in-shoe sensor and a receiver that attaches to iPod. A new Nike Sport Music section on the iTunesMusic Store and a new nikeplus.com personal service site help maximize the Nike+iPod experience.  

METRO Group Goes Live with Gen 2 RFID in Cash & Carry Stores

METRO Group, one of the world's largest retailers, goes live with Intermec Inc. Gen 2 RFID technology in its Cash & Carry wholesale stores throughout Germany. As of April 1, METRO suppliers have been able to ship tagged pallets with Gen 2 RFID technology. Metro Cash & Carry, the market leader in self-service wholesale, is using a new Gen 2 RFID infrastructure that includes Intermec's Gen 2 IF5 UHF RFID reader coupled with IBM middleware. The Intermec RFID Gen 2 technology deployed in METRO Group's Cash & Carry stores creates a platform on which to build interoperable RFID products and systems that will effectively track and trace pallets to ultimately improve inventory management. "Generation 2 RFID is here now," says Dr. Gerd Wolfram, managing director of MGI METRO Group Information Technology GmbH. "Intermec has been a strategic partner in our roll out of RFID technology. The partnership with Intermec in creating a live Gen 2 RFID infrastructure at Metro Cash & Carry confirms both companies' commitment to pioneering usage of this new technology."

Sephora Streamlines Supply Chain Management

Global beauty retailer, Sephora, selects Inovis as its primary electronic commerce provider. A longtime Inovis customer, Sephora will leverage Inovis' comprehensive suite of Managed Services to optimize business communications with its extensive trading community, while continuing to use Inovis Catalogue for data synchronization. As part of the hosted service, Inovis also manages Sephora's electronic data interchange (EDI) program for 180 suppliers, with whom the company securely exchanges business-critical information, regardless of disparate data, processes, or network and connectivity standards. "With more than 250 brands carried in 515 stores worldwide and 119 stores across North America, we value seamless communication and strong relationships with our vendors," says Janet Hanson, chief information officer of Sephora. "By entrusting our EDI program to Inovis, we are able to free up internal resources, reduce cost, and gain flexibility and speed in on-boarding new trading partners, while remaining focused on delivering a broad range of products to our clientele."

Federated Department Stores Supports Rising Volumes

Federated Department Stores Inc., one of the nation's leading retailers, will deploy Integrated Logistics Solutions from Manhattan Associate's to support its direct-to-consumer business — including macys.com, bloomingdales.com, Bloomingdale's By Mail, macysweddingchannel.com and bloomingdalesweddingchannel.com — helping customers experience convenient and enjoyable online shopping. "Online sales represent the fastest-growing part of our business," says Pam Sweeney, senior vice president of logistics systems and technology, Federated Logistics. "It is an outstanding opportunity. We want to maintain momentum by investing in technology that will provide long-term support — so we can serve our online shoppers as their numbers continue to rise." The supply chain execution and business intelligence capabilities within Manhattan Associates' Warehouse Management, Labor Management, Slotting Optimization and Performance Management solutions will support increasing volumes of online orders and enhance efficiency and customer service. Advanced capabilities will help Federated facilitate additional personalization of gift packages and provide customers with detailed information on order status and delivery schedules. As it opens its direct-to-consumer distribution center in Portland, Tenn., Federated will utilize the Labor Management and Slotting Optimization solutions to optimize facility resources, increase productivity of its workforce and establish efficient processes.

nuBridges Acquires iSoft

The provider of eBusiness solutions, nuBridges LLC, acquires the assets of iSoft Corporation, a provider of secure file transfer and B2B information exchange solutions. With nuBridges, companies connect with trading partners and customers using the Internet as the gateway. The new offering will allow enterprises to replace brittle, vintage eBusiness environments with flexible and scaleable infrastructures that provide substantial new capabilities, at a much lower cost of ownership. iSoft was recently recognized as a 'visionary' in Gartner's Magic Quadrant for B2B Gateway Providers. iSoft employees will continue to operate from the company's Dallas-based office.

IBM Thwarts Cyber Threats

IBM announces new products for IT management and security as well as consulting services capabilities to help businesses address emerging cyber threats and the need to reduce IT complexity. The new IBM WebSphere DataPower SOA appliances and SOA security consulting services can help businesses fend off threats from the estimated 85 percent of malware -- including computer hacking, consumer identity theft crimes, viruses or other security vulnerabilities -- that is motivated by illegal profits. New IBM WebSphere DataPower SOA appliances -- based on technology acquired from DataPower last year -- are less than two inches tall and 19 inches wide and can be installed and configured in minutes into a client's existing network to secure, manage and authenticate the validity of messages from various sources including Web transactions, RFID and other wireless devices up to 10 times faster than general purpose systems. When combined with SOA security management software from IBM Tivoli, which securely controls user access to applications and data, the appliances help to ensure that the right people have access to the right data, at the right time.

AT&T Accelerates Adoption of RFID through Collaboration

AT&T Inc. and its subsidiary, Sterling Commerce, are partnering with Intel, BEA Systems and Symbol Technologies to design and deploy RFID device services and networks for business customers. The goal of this initiative is to provide business customers with a best-of-breed managed RFID service and standardization of RFID technology by accelerating the mass adoption of RFID through the evolution to universal sensor networks (USN). Currently conducting customer trials, scheduled for completion by mid- 2006, the companies are working on network solutions that incorporate end-to-end services for RFID networks across diverse hardware platforms, operating systems, applications and databases. AT&T and its partners are working with RFID standards groups like the Internet Engineering Task Force and EPCglobal US, an affiliate of EPCglobal Inc., to improve the manageability and protocol support of RFID devices.

Sara Lee Appoints Head of Central Insights

Sara Lee Food & Beverage (SLF&B) appoints Ravi Parmeswar as vice president of the company's Central Insights Group, where he will lead the North American consumer, shopper and retailer research and insights teams. Additionally, Parmeswar will support innovation growth by identifying key performance indicators and measurement processes for brand equity, as well as new processes for creating and using insights in business planning. Prior to joining SLF&B, Parmeswar held senior management roles leading global marketing at top consumer packaged goods companies, including The Coca-Cola Company and Campbell Soup Company.

Tommy Hilfiger Makes Leadership Changes

Tommy Hilfiger Corporation announces the appointment of its new worldwide leadership team, following the sale of the company to funds advised by Apax Partners earlier this month. Overall, the company will consist of four independently managed business units (United States, Canada, Europe and the Far East Buying Offices) directed and controlled by a small corporate management team consisting of Chief Executive Officer Fred Gehring; Chief Operating Officer Ludo Onnink; and Joe Scirocco, who is continuing as Chief Financial Officer. Support will consist of three Executive Vice Presidents. Avery Baker, previously from TH USA but during the last three years based in Europe, will serve as the EVP-Global Communications; Michael Arts, also an executive from TH Europe, will serve as the EVP-Global Brand Management in which he will work closely with Tommy Hilfiger; and Anne Marino, who recently joined the company from Donna Karan, will serve as EVP-Global Licensing. Within the U.S., Allan Zwerner will continue to serve as president of U.S. Wholesale and President of the Menswear business. Leslie Singer, formerly president of Juniors', is appointed as president of the Womenswear business, which will now include both women's and juniors'. Gary Sheinbaum will continue to serve as president of the U.S. retail business. Anne Marino will serve as president of U.S. Licensing, and Joe Scirocco will serve as chief operating officer of Tommy Hilfiger U.S.A., in addition to his role as Group CFO.

Dean Foods SVP- Finance and Treasurer Resigns

Dean Foods Company reports that Cory Olson, senior vice president - Finance and Treasurer, plans to resign from his position effective July 18, 2006, to serve as a managing partner of StoneBridge Real Estate Partners, a Dallas-based private equity firm. Olson was responsible for building and maintaining relationships with the investment and banking communities and played a primary role in establishing the risk and cash management practices for Dean Foods.

The Last Ten Yards of the Demand Chain
By Manav Misra, PhD, co-founder & vice president of strategy, StorePerform Technologies Inc.

While it's difficult to gain just 10 yards in the sport of football, the world's retailers are having an exceedingly tough time with their own 10 yards. Retailers and manufacturers have spent the past couple of decades ironing out supply chain inefficiencies, and after investing millions of dollars on IT and logistics are now reaping enormous benefits. These solutions can deliver product from far off manufacturing plants to the store quickly and efficiently, but they've failed in one regard: they ignored the "last 10 yards." As a result, getting product from the stock room to the shelf might actually be more difficult than gaining 10 yards against 300-pound linemen. The CPG and retail industries can no longer afford to ignore this problem, and there are various process and IT changes that have the capacity to shore up these final holes in the demand chain.

So why are these 10 yards so problematic? At root are the fundamentally flawed, disorganized and fragmented processes between store headquarters and individual locations. Retailers currently send instructions and orders down from multiple departments at headquarters—HR, finance, marketing, legal, merchandising—without accounting for one another, or the workload at the store level, often overwhelming managers and individual stores in the process. Store managers must root through voicemail, email, binders, Intranet and other communications to prioritize these requests, but this can result in mismanaged tasks and workload distribution, including missing obvious stock shortfalls. There's also no structured feedback loop, so headquarters is often unaware of what tasks have been completed, when stores are under-stocked and how stores are actually performing.

The current difficulties, unfortunately, have a pronounced impact on the retail bottom line. For one, the expense of getting the product to the floor can often reach unbelievable levels. A European retailer recently admitted it cost more to deliver a bottle of wine from the stock room to the shelf than it did to ship a case of wine halfway around the globe. Additionally, that inability is the chief cause of daily and promotional stockouts. On a daily basis, these problems result in nearly 10 percent stockout rates across the industry. Promotional items, which are a chief customer enticement, go out of stock at a nearly 25 percent rate. And when those items aren't there, almost 50 percent of customers will leave to find products at another store. They don't forgive the retailer and buy another product; they simply walk out of the store! Though manufacturers and suppliers attempted to address these problems with supply chain solutions, direct-to-store delivery and even expensive vendor management of the entire stocking process, cracks remain. And wherever highly manual efforts like stocking shelves must occur, costs accumulate quickly if run inefficiently.

Again, the most expensive portion lies in the manual processes currently involved in coordinating the movement of products from the backroom to the shelf. Changes to that process not only keep shelves full, but cut costs within the entire retail enterprise. To do so, retailers can utilize retail task management or store execution management (SEM) solutions, which pull all departments and duties into a central repository, and coordinate communications between headquarters and every store location. Typically web-based, these solutions give managers and headquarters a complete view into all tasks and requests made on often-overloaded store locations. This allows headquarters to set workload and priorities, and managers to easily assign tasks, like moving product from stock room to the shelves, at the store level. And because compliance communication is built into these applications, all the links of the demand chain can be given visibility of when shelves are full and when they are empty. Well beyond that, SEM allows for complete insight into communications and tasks across all departments and store locations.

As retailers and their supply partners made the supply chain amazingly efficient, they ignored a final link in that chain. It remains a costly oversight, but in changing the processes by which stores operate, retailers can wrangle out even further efficiencies, reducing expenses and ensuring those 10 yards are, at last, easier to gain than 10 yards on a football field.

Prior to co-founding StorePerform Technologies, Manav Misra was the senior director of strategy at KBkids and was actively involved in the acquisition of eToys. Manav also had the role of senior director of business intelligence at KBkids, during which time he led the BI team in building a data warehouse, decision support system, and Intranet DSS portal. Earlier, he was a professor of computer science at the Colorado School of Mines where he performed research in Intelligent Systems and High Performance Computing. His specific interests were in data analytics, and mining large data sets. He has a BS (Electrical Engineering) from the Indian Institute of Technology - Kanpur and a Ph.D. (Computer Engineering) from the University of Southern California. For more information, visit www.storeperform.com or e-mail [email protected].