安達(dá)信：Electrolux China “Network Strategy” Project Final Report Presentation

1、安達(dá)信：Electrolux China “Network Strategy” Project Final Report PresentationElectrolux China “Network Strategy” ProjectFinal Report PresentationBeijing, March 10, 1999Project Introduction and BackgroundCustomer Survey - Survey Approach - Survey Results - Findings and OpportunitiesLogistics Network - EO

2、Q inventory modeling - Logistics network modelingRecommendations and next stepsAppendices - Process flow - Cost analysisContentsMajor Brands Market Share in 1999Electrolux China has identified supply chain improvements as one of its corporate priorities to improve customer satisfaction and cost perf

3、ormance.Electrolux ObjectivesReduce working capitalIncrease turnover (through greater product availability)Reduce operating costsElectrolux China has committed to achieve Best Practice Service and Cost, as basis for rapid business growthhigh inventory carrying costin-store stock-outstoo many warehou

4、ses: limited inventory and service control: SOP systems and procedures for inventory control are not systematically in place/applied limited know-how and supportunclear responsibilities and performance criteriaElectroluxs supply chain objectives. are to improve current performance. to deliver real b

5、ottom line benefitsSatisfy requirements of target customers (better than competition)Achieve full control of the entire logistics processLimited visibility and control, appropriate perforrmance criteria not in placeLikely gaps in service satisfaction. Required Service Levels and competitors position

6、 are not measuredThe overall objective of Electrolux China Network Strategy Project is to optimize the distribution network configuration in terms of: - Meeting customer service requirements; - Achieving minimum costs; and - Controlling the entire outbound logistics process.Increased Revenue - Impro

7、ved product availability and promising capabilities - Scalability to meet future business requirements. - Improved responsiveness to market conditions. - Optimized fill rate capability. - More flexible, responsive delivery options - More value-added services.Reduced logistics costs - Improved end to

8、 end supply chain visibility - Lower cost-to-serve in transportation and distributionImproved asset productivity - Fewer stock locations through rationalization to achieve higher network productivityReduced working capital - Lower LDC stocks through more flow-throughs, smaller more frequent orders,

9、centralized slow movers, better use of supplier stocks etc.EXPECTED RESULTSPROJECT OBJECTIVE:The overall objective of Electrolux Network Strategy Project is to determine the least cost distribution network configuration to satisfy the specific service level requirements of its current and future tar

10、get customers Project Objective and ScopeThe scope of the Network Strategy Project is to answer the following questions:What are the customer service requirements which impact channel design, logistic process and infrastructure? What is the current performance (performance measure and customer satis

11、faction) of Electrolux in meeting these requirements and what is the GAP versus the competitors as well as against the “Best Practice” achievable in China?Should Electrolux provide inventory carrying and transportation services to our clients (with appropriate price increase)? What other additional

12、logistic services can provide competitive advantage to Electrolux in the market place?Should Electrolux change the structure of its distribution channels in China (e.g. sales to retailers, vs to distributors?)Can Electrolux gain by plant direct shipping?How many distribution centers (DCs) should Ele

13、ctrolux have? How many RDCs and LDCs? Where should the DCs be located? Which types/location of customers and which branch should be served by each DC? Which customers should be served directly?Should all DCs carry all products or should they be specialized by product line?Should Electrolux contract

14、for warehousing services or operate its own DCs?What impact do different transportation modes have on Electrolux logistics network requirements?What inventory control procedures (high level) should Electrolux establish in order to satisfy customers, minimize cost and maintain control?What are the sy

15、stems and human competencies requirements to achieve these objectives?In developing the optimum supply chain capability for Electrolux China we are utilizing a three-phased approach to developing and rolling-out the new distribution network - This project covers only Phase IOverall Approach towards

16、Network OptimizationBuild Logistics ModelTask 5Assess AlternativesTask 6Conduct Review SessionsTask 7Present Results, Recommen- dations & Implemen- tation Action PlansTask 8Conduct Visioning SessionsTask 1 a.Initiate Data CollectionReview Current OperationsTask 2Under-standService Require- ments

17、 Task 3Initiate Detailed Project PlanningTask 1Task 4Full-Scale Implementation RolloutPhase IPhase IIPhase IIIDistribution Network Process DesignDistribution NetworkStrategy DevelopmentCUSTOMER SURVEYNETWORK OPTIMIZATIONProject Approach1Initiate Detailed Project Planning1.a Conduct Visioning Session

18、s2Review Current Operations2a. Understand current network setup2b. Review current network logistics strategy2c. Review current customer service strategy3Understand Service Requirements (customer interviews and analysis)3a. Create customer segmentation frameworks5Identify Alternatives5a. Perform dema

19、nd aggregation analysis6Assess Alternatives7Conduct Review Sessions8Present Preliminary Results & RecommendationsKey Activities by Week (assuming 10 weeks) 123456789103h. Analyze customer requirements and assess Electrolux GAP3k. Analyze Cost to Serve and Strategic Attractiveness3l. Develop Reco

20、mmended New Service Offerings3m. Assess Logistics Warehouse Netwk Strategy Implications4Initiate Data CollectionCollect Current Warehouse Network Dataa. Facility Operating Costsb. Transportation Costsc. Inventory Costsd. Demand volumes3b. Interview Customers in Location 13c. Interview Customers in L

21、ocation 23d. Interview Customers in Location 33e. Interview Customers in Location 43f. Interview Customers in Location 53g. Interview Customers in Location 65b. Selection of 5-8 “best options”P(pán)roject WorkplanProject Introduction and BackgroundCustomer Survey - Survey Approach - Survey Results - Find

22、ings and OpportunitiesLogistics Network - EOQ inventory modeling - Logistics network modelingRecommendations and next stepsAppendices - Process flow - Cost analysisContentsThe sample for the customer survey targeted a representation of Electroluxs current operations in China, and its current and fut

23、ure market- Customer Sampling Methodology - Historical SalesMarketGrowth &TrendsCurrent Logistics Operation Where were the highest demand areas?Where are the customers located, which has significant contribution to Electrolux revenue?What are the current customer types?Where are the key account

24、customers?What is the current sales regions?Where would be the potential high growth areas for refrigerators?What will be the emerging channel for white goods?What are the service requirements from the emerging channel players?What is the current logistic service pattern, with regard to the LDCs” di

25、stribution and the customers which are being served?Interview AreasInterview CustomersSurvey Sample Size and CoverageInterview AreasSurvey Sample Size and CoverageInterview AreasInterview CustomersSurvey Sample Size and CoverageThe project team focused on obtaining as much customer data through dire

26、ct interviews. A customer survey was faxed out to broaden geographic coverage- Customer Survey Approach - Fax Out Survey Focused on several AC/Electrolux chosen locationsBeijing, Tianjin, Shanghai, Guangzhou, Changsha, Chengdu, Shenyang, ShenzhenCustomer TypesDistributors: Provincial level, city lev

27、el Retailers: Department store, home appliance store, chain storeKey Accounts: International chain storesBroad geographic coverage to include areas where direct interviews could not be conductedStill aimed to achieve representative sampling of distributors and retailersDirect InterviewsIn total, 81

28、customer survey questionnaires were collected representing a broad cross section of Electrolux customers- Customer Survey Breakdown - DistributorsRetailersKey AccountsProvincial Level728International Chain StoreCity Level12133Department StoreHome Appliance Multiple Format 10Chain Store 7Total81Sub T

29、otal19593Super Market 1 and also Electroluxs markets- Customer Survey Breakdown - RegionsNCECGZWestCentralCSNEInterviewedSurvey2121957441076068Total4140Total6228155131281ChangshaBeijingShenyangShanghaiChengduGuangzhouQingdaoSuzhouTianjinDalianKunmingNCNECentralECGZwCSProject Introduction and Backgro

30、undCustomer Survey - Survey Approach - Survey Results - Findings and OpportunitiesLogistics Network - EOQ inventory modeling - Logistics network modelingRecommendations and next stepsAppendices - Process flow - Cost analysisContents8. Are you being served by Electrolux directly? Yes? NoAll responses

31、 were in the “Yes” categoryQuestion 8Why were non-Electrolux Customers not covered by the survey?Due to new survey regulations which were recently released (Dec. 1999) by the State Statistical Bureau (SSB), a company must obtain permission and approval for all market surveys conducted (this approval

32、 covers survey scope, approach and also a review and approval of the survey results by the SSB before they are released clients). The obstacles put in place by the regulations (e.g. applying for permission, having a survey reviewed and approved, etc.) could have added several weeks to the project co

33、mmencement date and additional time before the results can be released. At this stage, we are not aware of any companies which have sought and gained approval (including Gallup). The key problem is that the survey reforms having only recently been implemented and the local branches of the SSB are st

34、ill establishing the administrative system to deal with it. Therefore, the most ”practical” approach for conducting the project survey given the current environmental constraints was to cover only our existing customers since it was unlikely that they would report the survey to the SSB.Electrolux Cu

35、stomer9. Sales revenue growth in the next 1-2 years? <15%? 16-30%? 31-40%? 41-60%? >60%Response: 33%30%19%3%12%Question 9CommentsThe majority of respondents were positive in their sales outlook both for their sales overall (ranging from refrigerators to general home appliances) as well as spec

36、ifically for Electrolux products. Typically, growth in sales of Electrolux products responses ranged in the 10 to 30% band.Guangzhou, Western China, Eastern China, North Eastern and the North China regions were anticipated to experience the greatest sales growth in the next two years. Changsha and t

37、he Central regions are anticipated to have . And customers who is the new entry into the market expect higher growth rate than the othersNote: Data limitation since responses were tailored based on the position of the person interviewed (i.e. a general manager of a distributor would have a broader 6

38、view of sales growth to that of a sales manager only involved in the sales of Electrolux products).Sales Revenue Growth10. What are the key brands of refrigerator in your current business and what is the proportion of these brand sales represent in your total refrigerator sales? Who sell directly? W

39、ho supplies you directly ? Question 10Refrigerator Sales Brand NameElectrolux Haier Rongsheng Xinfei Meiling ChanglingPercentage of Total Sales (%)Purchase Directly from Vendor by RetailerGoods Shipped Directly from Vendor to Retailer Days Inventory SiemensDR60%21%DR23%27%DR19%14%DR17%13%DR9%9%DR6%8

40、%DR8%17%92%91%84%86%86%95%91%91%94%83%72%92%86%92%1715N/AN/A15N/AN/ADRDRDRDRDRDRDR12181616161917Comments8 out of the 26 customers who distribute Electrolux refrigerators only sell Electrolux products.Over 90% of the customers purchase directly from Electrolux and are also directly served by Electrol

41、ux Foreign players, such as Carrefour, Ito Yokado, keep low inventory levels, typically less than 5 days. In contrast, the average inventory level for local players varies from 7 to 30 days. Customers in CS and NE holding higher inventory level than other regionsElectrolux has lower inventory level

42、than the competitors at its retailer shop, but has higher inventory level at its distributor sites LegendD: DistributorR: Retailer11. Please specify the amount of the refrigerator sales in 1999Question 11CommentsWholesaleRetailAverage Volume 19994,752 units, 4,640 unitsMarket Share (%)28%24%Refriger

43、ator SalesNote: These results are only for high level reference(1) Except 8 out of 19 distributors who are purely doing distribution sales and 36% of retailers who only have retail sales, the rest are all carry on multiple roles in both distribution and retail sales. (2) The distribution sales is qu

44、ite low because survey includes a number of new distributors, and the sales number is also skewed by retailers who have weak distribution sales. (3) The retail sales number is skewed by a couple of retailers whose retail sales is even higher than most of distributors sales during a year(4) The marke

45、t share of retailers looks higher since the data is skewed by some dominant local retail chains and dominant retailers in county level cities.12. Do you experience the sales fluctuation in different months? Yes, the fluctuation is as follows? No? Peak months are _, Sales _units/month ? Normal months

46、 are _, Sales _units/month ? Low months are _, Sales _units/month Question 12Survey ResultsComments92% of respondents confirmed the seasonal nature of their salesThe period just prior to Chinese New Year and the summer months are the two peak seasons with sales volumes around 80% higher than transit

47、ional periods.The 2-3 months after Chinese New Year and November are the low season months with average sales volume 26% lower than transitional periods.May, October and December are the transitional month from normal season to peak season.Peak seasonsAverage Sales(Units / month)MonthsTransitional p

48、eriod(s)Low seasonsJanuary (pre-Chinese New Year), June to SeptemberMay, October, DecemberFebruary to April (post New Year) November849472351SeasonSales FluctuationOrderingOrdering - Table AOrdering Service Importance and Customer SatisfactionProduct AvailabilityAbility to Respond to Urgent Orders O

49、rder FrequencyMinimumOrder Size1.41.31.21.1Ordering1.ItemsNo.Satisfaction (Electrolux)Importance4.1421354.1421353.642135Satisfaction Generally3.9421354.1421354.3421354.6421354.6421354.0421353.53.5421353.7421353.7421353.6421353.84213542135aRate from Electrolux Sales Managers Rate from Electrolux cust

50、omers A3.74.93.83.34.41.94.03.8Ordering - Table A“Ability to Respond to Urgent Orders”, and “Product Availability” ranked the most important factors from the surveyThough above average, the customer satisfaction rate towards Electroluxs ability to respond to urgent orders scored relatively the lowes

51、t among all the factors. Customers from most of the regions, such as Carrefour Beijing, Guangzhou Department Store complained that there is no differentiation in response levels between the normal orders and urgent ordersThe overall customer satisfactory rate towards Electroluxs ordering service lev

52、el is particularly low in the Guangdong region Most of the retailers showed lack of understanding for minimum order quantity and order frequency as they are presently ordering based on demand and payment credit, and regard minimum order quantity as less important in affecting their business revenues

53、. Several customers indicated “1” as desired minimum order sizeOrdering Service Importance and Customer SatisfactionOrdering - CommentsOrdering Service - Best Ordering Service - Competitor Feedback from Surveys Ordering - Competitor1. Minimum Order SizeBestWorstElectrolux4 (2-EC)Haier33 (2-W)Siemens

54、3 (2-W)Xinfei2Best - Overall, Electrolux does have the most answers for best, but the responses were quite spread out geographically. Electrolux appears to be slightly stronger in Eastern China, while Siemens appears to be slightly stronger in Western China.Worst - Haier clearly has the most mentions and it appears to be weakest in the West.Data - Data is scattered across answers. Minimum order size is 1, but it is very much dependent on who the customer is. Similarly for the worse2. Order FrequencyBestWorstHaier22Electrol