Tesco And Gillette: Shrinkage Reduction Project In Hungary
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Tesco & Gillette
Shrinkage Reduction Project in Hungary
- Zsolt Partos, Trading Director, Tesco Hungary
- Bill Cody, Country Manager, Gillette Group Hungary
Tesco Profile
• Global retailer: UK, Central Europe and Asia.
• Tesco Hungary: 21 hyperstores and 27 superstores.
• Business growth through long term customer loyalty by meeting constantly changing customer needs.
• Low levels of shelf out of stocks and customer friendly merchandising are key pillars of the Tesco strategy.
• Business goals are severely challenged by the complex problem of stock loss.
• Tesco is addressing stock loss to drive sales and improve profitability.
Gillette Profile
• Global manufacturer of grooming, portable power and Oral Care products including:
– MACH3 and Venus
– Duracell Ultra
– OralB/Braun Power Assisted Toothbrushes
• Tesco is a key customer, globally and in Hungary.
• On Shelf Availability and Visibility in retail outlets is critical in achieving category growth. Stock Loss is a barrier to this.
• In response, Gillette has invested in specialist store operations resources to work in collaboration with key customers to remove all the barriers, such as stock loss, to perfect retail execution.. Project Background
May 2001 • Stock loss levels on Gillette Blades & Razors cause major impact on Tesco P&L.
• Gillette B&Rs taken off open sale = lost sales
July 2001 • Gillette and Tesco agree to collaborative approach
• Respond with 14 day plan that addresses immediate need
Oct 2001 • Launch ECR Europe Shrinkage Project to address long-term needs
Project Objectives
•
•
•
•
Identify root causes of stock losses on Blades & Razors
Develop fact based solutions
Prioritize the key wins to implement within time scales
Specific Goals:
–
–
–
–
–
–
–
Reduce Stock Loss to acceptable level < 3%
Improve on-shelf availability and reduce shelf out of stocks
Be customer facing, satisfy their needs
Increase sales ahead of market growth
Raise net profitability
Implement solutions that are simply and easy to use
Makes procedures transparent and transferable
Project Team Structure
Tesco
Gillette
Sponsors:
Paul Kennedy
Chris Mummery
Bill Cody
Steering Group:
Dave Fenlon
Csikos Gellert
Colin Peacock
Project Managers:
Victor Jegesi
Gyorgy Ruszkovszky
M.Coulam, P.Juhasz
P.House, Zs. Partos
Steve Glasson
G.Horvath, J.Somogyi
Lilla Horvath,
R.Horling,
J.Petrovszky
Team members:
Support:
Internal audit, IT and Finance
Cranfield School of Management
Project Scope
Gillette D.C.
( P&O )
Tesco D.C.
Information Flow
Point of Sale
Methodology
Walked the process from Gillette DC to Tesco POS
Independent
Audit of results
Plan
Map & Measure
Evaluate
Wake Up !
Implement
Trialed solutions in
3 hypermarkets
Analyse
Develop
Solutions
Focused on “10 steps” solutions Identified
150 areas of risk
Solutions Implemented: The “10 steps”
• Tesco / Gillette “10 Steps” video
Solutions Implemented: The “10 steps”
• Secure ‘hot product’ Supply Chain
1. Sealed pallet from DC to outlets
2. Each product movement checked & documented
3. Products fast-tracked into secured storage locations
• Secure In-Store Handling
4. Controlled replenishment between secure storage and shop-floor
Frequent replenishment
5 & 6 Visible display location - Anti theft fixtures
• Ownership and Control of Loss
7 & 8 Stock loss results owned by in-store champion- Staff awareness
9. Ongoing control through regular stock counting (front and back of store) 10. Measure & Adjust
Effect on In-store Stock Loss
Average Weekly Losses / Units
40
30
20
10
0
During Defensive Merchandising
After ECR Project
Source:data from 3 Tesco Hypermarkets
Effect on Sales
Average Weekly
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