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Supply Chain Rebuilt Avon

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by

Monika Jakobowska

on 13 November 2012

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Transcript of Supply Chain Rebuilt Avon

Monika Jakobowska Expectations associated with new model

•Centralized planning

•Monitoring demand and inventory levels across the region

•Rapid response

•Supply chain transformation be process-driven, not systems-driven Primary focus on marketing and sales
Avon had neglected its supply chain for years. Avon Markets
As the world's largest direct seller, Avon markets leading beauty, fashion and home products to women in more than 145 countries through approximately 3.5 million independent Avon Sales Representatives. Reconstruction steps

•Creation of a common database (visibility)

•Installation a supply chain and scheduling system

•Establishment of a regional planning group

•Redesign the supply chain
Consolidation German plant with Polish plant
Creaton of a centralized inventory hub in Poland Benefits of new end-to-end view

• Clear Sales trends

•Knowlage what demand actually is

•Standardization of containers

•Labeling bottles itself instead of relying on suppliers

•More flexible manufacturing

•Buy materials in large volumes

•Better communication with suppliers Further restructuring \ Restructuring of the organization

•Four key processes: plan, source, make, and deliver

•Developing new metrics

•Education and training Rethinking Supply Chain Efficiency Consistency Benefits Supply Chain Rebuilt Previous model

•Country based supply chain model


“Ten years ago we operated country to
country, with a very decentralized model.
You just can’t compete that way now.” Problems

•The company’s selling cycle vs. supply chain

•Timing mismatch

•Rush orders destroyed manufacturing efficiency

•Language
“We took 45 of our best people in Europe out of their positions and
put them into the project full-time for 18 months.” Removing those
people from day-to-day operations was painful, costly, and risky,
but it was absolutely critical to success. By rethinking its supply chain, Avon will
save about $50 million annually. Why? Importance underestimated
Complex
Time-consuming
expensive

But

Typically savings of 12-20% The 7 signs Missing strategy Objectives for each department
If combing objectives - conflict
Same strategy
SC design tools Does not fit current requirements
Market changes - SC needs change
Problem: Short-term thinking Questioning Budget Usually set as % of revenue
Changing conditions - adaption Collaboration Shared resources - centralize SC
Savings and efficiency overestimated
Different SC processes do not match
Thorough analysis necessary Service failure Reveal problems in SC
Reasons: Low stock, fluctuating demand, unexpected situations
SC design tools help to simulate Losing control SC disruptions decrease profit
Evaluation of risks and alternatives
Example: Vulcano eruption Long-term contracts No possibility to adapt to market
Review and renewal of contracts every 3-5 years Redesign process 1st phase:
around 20 days
assessing potential of redesign

2nd phase:
50-100 days
detailed analysis

Scenario planning with SC tools Missing strategy

Integrate employees

Budget

Service failure

Losing control Avon Theory Common strategy

Asking "truckloaders"

Increasing budget

Wrong language on bottles
No chance to grow Thank you
for your attention!
Full transcript