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Ashland – Valvoline Trials and Tribulations of Alternate Supply Chains. University of Kentucky 2013 Supply Chain Forum. Corporate Profile. Sales 1 - $8.1 Billion. By geography. By commercial unit. Ashland Water Technologies 21%. Ashland Specialty Ingredients 35%. Europe 26%.
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Ashland – ValvolineTrials and Tribulations of Alternate Supply Chains University of Kentucky 2013 Supply Chain Forum
Corporate Profile Sales1 - $8.1 Billion By geography By commercial unit AshlandWaterTechnologies21% AshlandSpecialtyIngredients35% Europe26% North America253% AshlandPerformanceMaterials19% Asia Pacific14% AshlandConsumerMarkets 25% LatinAmerica/Other - 7% 1 For 12 months ended December 31, 2012 2Ashland includes only U.S. and Canada in its North America designation
Four Strong Businesses 1 For 12 Months ended Dec. 31, 2012
Table of Contents • Vendor Managed Inventory • Retail Direct Store Delivery • Floor Ready Merchandise • Seasonal Direct Store Delivery • Cross Docking • Radio Frequency Identification (RFID) • Pay On Scan • enVision (Joint Supply Chain)
Physical Product Movement Retailer Distribution Center Base Oil & Additives Component Suppliers Blending & Packaging Distribution Center Store Transactional Data Information Flow Cultural Challenges
Vendor Managed Inventory Premise: Assign Replenishment Responsibility to Vendor Physical – Distribution Does Not Change Transactional – Orders Still Placed at Distribution Center Level Informational – Access Granted to Retailer Systems Cultural – Desire to Maintain Retailer Rules vs Monitoring Performance Retailer Distribution Center Base Oil & Additives Blending & Packaging Distribution Center Component Suppliers Store Physical Transactional Informational Cultural
Direct Store Delivery Premise: Deliver Product from the Valvoline DC Direct to the Retail Store Physical – By Pass the Retailer DC – Ship straight from Valvoline Transactional – Orders by Store – Retailer Receipt of Material! Informational – Impact on Promotional Periods Cultural – Retail Store Management and Labor Planning Retailer Distribution Center Component Suppliers Base Oil & Additives Blending & Packaging Distribution Center Store Physical Cultural Transactional Informational
Floor-Ready Merchandise – Promotional Pallets Premise: Vendor Builds and Delivers Promotional Pallets Ready for Floor Placement Physical – Pallets Assembled by Vendor and Shipped Ready for Display; DC Space May be Bottleneck Transactional – Pallets Ordered and Shipped at Distribution Center Level: Accounting Must Disaggregate for Proper Reporting Informational – Timing of Promotions Critical; Difficult to Coordinate with Sales Cultural – Customization Leads to Proliferation;Working Capital Concerns Retailer Distribution Center Base Oil & Additives Component Suppliers Blending & Packaging Distribution Center Store Physical Transactional Informational Cultural
Seasonal Direct Store Delivery Premise: Relieve Retail DC and Delivery Burden of Seasonal Product Physical – By-pass the Retailer DC and Delivery Trucks Transactional – Orders by Store – Keying Burden Informational – Coordination with Third Party for Delivery Windows Cultural – Retail Buyer did not benefit from Supply Chain Execution Retailer Distribution Center Component Suppliers Base Oil & Additives Blending & Packaging Distribution Center Store Physical Transactional Informational Cultural
Cross Docking Premise: Pick to Store and Flow Through Retailer DC Physical – Eliminate Retail DC Inventory Investment and Labor Transactional – Orders by Store – by Week Informational – Planning and Communications of Promotions Cultural – Retail Buyer did not benefit from Supply Chain Execution Retailer Distribution Center Component Suppliers Base Oil & Additives Blending & Packaging Distribution Center Store Physical Transactional Informational Cultural
Radio Frequency Identification (RFID) Premise: Seamlessly Integrate the Physical Movement of Goods with Information Systems Physical – Attach RFID Labels to SKUs – Requires Change to Equipment and Process Transactional – Potential to Automate Order Creation Informational – Electronic Data Exchange Cultural – Perception of Undue Burden on Vendors Retailer Distribution Center Base Oil & Additives Blending & Packaging Distribution Center Component Suppliers Store Physical Transactional Informational Cultural
Pay On Scan Premise: Vendor Owns Inventory on Retail Shelf – Paid on Sale Physical – Distribution does not Change – Concern over Stock Shrinkage Transactional – Entire Focus Shifts to Sales – Scanner Data – Inventory Mgt. Informational – Access to Retailer Management Practices Cultural – Stretches the Limits of Trust and Transparency Retailer Distribution Center Component Suppliers Base Oil & Additives Blending & Packaging Distribution Center Store Physical Transactional Informational Cultural
enVision Premise: Reduce Vendor Interfaces by Combining Supply Chains Physical – Consolidate Smaller Vendors Low Velocity Materials with High Velocity Valvoline Lubricants Transactional – Combine Orders to Achieve Freight Efficiency Informational – Electronic Data Exchange Through On-Line Marketplace Cultural – Issues with Trust and Native System Bias Base Oil & Additives Retailer Distribution Center Blending & Packaging Distribution Center Component Suppliers Store Physical Transactional Informational Cultural