Suppliers

Scaling The Benefits of Upstream Integration
Nestlé and the Global Upstream Supply Initiative
(GUSI)
Tony Fitzhugh
Nestlé Zone Europe eSupply Chain Coordinator
Strasbourg , EUROLOG 2006, June 21 2006
Today’s Objectives
To raise awareness of the GUSI initiative and to
stimulate interest across peer manufacturers &
suppliers
To demonstrate how Nestlé is working “today“ with
suppliers & other manufacturers to develop and
implement upstream collaboration programs based
on scaleable industry standard solutions
To help you identify what the next steps could be
for your company
Agenda
Overview Nestlé SA
Upstream Integration – What Is It?
Global Upstream Supply Initiative
Nestlé Experience – Crown
Implementing & Roll Out
Q&A
Nestlé SA
Nestlé with headquarters in Vevey,
Switzerland was founded in 1866 by Henri
Nestlé and is today the world's biggest food
and beverage company.
Sales at the end of 2005 were CHF 91 bn,
with a net profit of CHF 8 bn.
We employ around 250,000 people and have
factories or operations in almost every country
in the world.
Nestlé Brands
Confectionery
Nestlé, Crunch, Cailler,
Galak/Milkybar, Kit Kat,
Polo, Smarties, Butterfinger,
Aero,
Baby Foods
Nestlé, Nan, Lactogen, Beba,
Nestogen, Cerelac, Neslac,
Nestum, Guigoz, Good Start
Prepared Foods
Stouffer’s, Lean Cuisine,
Hot Pockets, Buitoni, Maggi
Beverages
Nescafé, Taster’s Choice, Ricoré,
Ricoffy, Nespresso, Bonka, Zoégas,
Nestea, Nesquik, Nescau, Milo,
Carnation, Libby’s, Caro, Nestomalt,
Dairy Products
Petcare
Ice Cream
Bottled Water
Food Services
Breakfast Cereals
Nestlé, Sveltesse, La Laitière,
La Lechera, Ski, Yoco, Svelty,
Molico, LC1, Chiquitin
Nestlé, Antica Gelateria del
Corso, Dreyer's/Edy's,
Drumstick/Extrême,
Maxibon/Tandem, Mövenpick
Chef, Davigel, Minor’s
Purina, Friskies, Fancy Feast, Alpo,
Gourmet, Mon Petit, Felix, Dog Chow,
Cat Chow, Pro Plan, Purina ONE
Nestlé Pure Life, Nestlé Aquarel,
Perrier,Vittel, Contrex, S.Pellegrino,
Acqua Panna,Levissima, Arrowhead
Shredded Wheat, Cheerios,
Nesquik,Fitnesse,Fibre 1,
Cookie Crisp
What is Upstream Integration?
It is about optimising the supply chain processes
between manufacturers and suppliers by
automating the mechanisms for sharing
information
This will provide increased responsiveness to
manufacturing requirements and hence better
consumer response
End-to-End Supply Chain Model
Suppliers
Manufacturers
Procurement
Supply
Planning
Retailers
Consumers
Sales &
Marketing
Upstream
Integration
Manufacturing
Distribution
Focus: manufacturing and
replenishment plans
Focus: consumer demand
Raw materials
and packaging
Consumer unit
Expected Benefits
Suppliers
Manufacturers
Procurement
Supply
Planning
Retailers
Sales &
Marketing
Suppliers
Upstream
Integration
–
–
–
–
–
Manufacturing
Better visibility
Optimized inventory levels
Better supplier service levels
Lower integration costs
Optimized processes
Distribution
Consumers
Expected Benefits
Suppliers
Manufacturers
Procurement
Supply
Planning
Retailers
Sales &
Marketing
Suppliers
Upstream
Integration
Manufacturing
Distribution
Manufacturers
–
–
–
–
–
Better visibility
Optimized inventory levels
Better supplier service levels
Lower integration costs
Optimized processes
–
–
–
–
–
Increased retailer responsiveness
Maximised production capacity
Optimized inventory levels
Reduced obsolescence
Optimized processes
Consumers
Expected Benefits
Suppliers
Manufacturers
Procurement
Supply
Planning
Retailers
Consumers
Sales &
Marketing
Suppliers
Upstream
Integration
Manufacturing
Distribution
Manufacturers
–
–
–
–
–
Better visibility
Optimised inventory levels
Better supplier service level
Lower integration costs
Optimised processes
–
–
–
–
–
Increased customer responsiveness
Maximised production capacity
Optimised inventory levels
Reduced obsolescence
Optimised processes
Retailers
– Increased on-shelf
availability
– Reduced time to market
Global Upstream Supply Initiative
(GUSI)
Suppliers and Manufacturers working together to:
Develop an industry integration solution
(Upstream Integration Model) based on:
– common processes
– common messages
Build momentum and usage
The GUSI group started informally in January
2003 and was integrated into GCI in November
2004
GCI GUSI Members & Supporters
Upstream Supply Chain
The Scaling Barrier
Business
Benefits
S
C
A
L
E
Current
company
specific
programs
on
d
e
s
Ba
e
l
a
Sc ards
e
t
a
d
Cre
Stan
B
A
R
R
I
E
R
Global
Benefits
across the
industry
Low return on
investment
No sharing of experience
High IT/IS Costs
No upstream industry standards
Lack of common approaches
Complexity
Time
Upstream Integration Model (UIM)
Standardises the data interchanges between
manufacturers and material suppliers for use in electronic
communications.
Covers the following business areas:
Procurement
Material forecasting
Inventory Management
Despatch, Receipt and Consumption of materials
Financial Settlement.
Within an overall (manual) Integration Agreement between
the manufacturer and the supplier.
Upstream Integration Model (UIM)
The UIM is a modular solution which covers the
„Plan to cash“ process for the 2 most used order
scenarios:
Supplier Managed Inventory (SMI)
Traditional Order Management (TOM)
Upstream Integration Model
Building Blocks
Integration
Agreement
Data
Alignment
Purchasing
Conditions
Manufacturer Process
Transaction
Supplier Process
Agree on business rules
Integration Agreement
Agree on business rules
Maintain Master Data
Item Master Data
Maintain Master Data
Agree Purchasing Conditions
Purchase Conditions
Agree Purchasing Conditions
Report Inventory
Inventory
Report Inventory
Purchase Order
Net requirements
Demand &
Supply Signals
Gather material requirements
Consumption Forecast
Plan production & supply
Replenishment Forecast
(instead of Inv. and R. Forecast)
Integrate information
Dispatch,
Receipt &
Consumption
Financial
Settlement
Purchase Order Confirmation
Delivery Plan
Confirm delivery
Await shipment
Dispatch Notification
Pick & Pack goods
Receipt of goods
Physical shipment of goods
Shipment
Check goods
Receipt Notification
Goods Receipt Notification
Consume goods
Consumption Report
Consumption Notification
Invoice receipt
Create Self billing invoice
Invoice confirmation
Create Remittance Advice
Initiate Payment
Invoice
Self billing invoice
Invoice confirmation
Remittance Notification
Physical Payment
Create invoice
Invoice receipt
Invoice confirmation
Payment Notification
Payment receipt
Upstream Integration Model (UIM)
More information on UIM available on the UIM report
published on the GCI website http://www.gci-net.org
The "Upstream Integration
Model"
Version 2
A foundation for global upstream
supply chain improvements
Final version: September 8th 2004
Integration in Practice:
The Nestlé Experience
Nestlé GLOBE
The GLOBE Program was established in 2000 in
order to unlock Nestlé's potential by:
Leveraging our size as a strength in a rapidly
changing environment
Uniting and aligning us on the inside to be globally
competitive on the outside
Enabling Nestlé to manage complexity with
operational efficiency
The GLOBE Template is a fully configured,
documented and tested solution composed of Best
Practice Business Process and custom developments
ready to be used in the Nestlé Markets.
eNestlé Strategy
To support the B2B vision, Nestlé will proactively
build its relationships with eMarkets focused on
B2B Collaboration to accelerate and drive industry
value chain integration and standardization.....
(source, eBusiness Strategy Blueprint Executive Summary)
Upstream Supply Chain Roll Out
Supplier
Supplier
Supplier
Supplier
Supplier
Nestlé
Supplier
Supplier
Supplier
Supplier
Nestlé & CROWN in Europe
30
sites
26
sites
10 Countries
Over 25,000 deliveries per year
Our Integration History
2006 Q2 GUSI
messages live
2005 Migration to GUSI
standard messaging begins
2004 GLOBE implemented in NPPE, eSC
solution adopted into GLOBE template
2003 Receipt advice and invoice messages
implemented (pre GLOBE)
2002 First messages live covering forecast, purchase
order and dispatch advice (pre GLOBE)
2001 Crown & Nestle Purina Pet Care (NPPE) begin integration project
?
Nestlé CROWN Project Scope
Over 160M cans & 230 M ends managed by
exchanging integrated messages (Forecasts/Orders/…)
CROWN
Concarneau
Nantes
Laon
Outreau
Perrywood
Braunstone
Wisbech
Parma
Dunaska
Streda
Nestlé
Quimperlé
Aubigny
Wisbech
Ijmuiden
Castiglione
Bük
Nestlé & CROWN Project Objectives
Key processes review / simplification /
harmonisation
Message availability
Automation of message exchange and
integration in to ERP systems
Key Processes Review
Review planning rules
Review lead times and
stock management policy
Re-define goods receipt
process
Integrate use of scanned
data of physical flow….
capacity
planning
bottlenecks
&
stock policies
Supply
Securisation
product range
planning &
mix of goods
planning
distribution
supply chain
discussions
harmonise
exchange of
information
flows of
information
simplification
Integration Scope
Supplier
Information
flow
Nestlé
CROWN
C
R
O
W
N
forecasts / orders
acknowledgement
dispatch note
invoicing / payment
barcoded data capture
Physical
flow
N
e
s
t
l
é
Retailer
Current Status/Achievements
Foundations of upstream integration between
Nestlé Purina and CROWN have been
established
Benefits identified though project still in the
process of being rolled out
Full benefits to be achieved during roll out
across Europe
Conclusions
The project between Nestlé and CROWN has
proved the opportunities for upstream
integration
To scale the benefits across trading partners an
industry integration solution should be agreed
between companies
The Leveraging and
Roll-out of GUSI & UIM
Implementing GUSI/UIM
Number of global companies actively implementing
GUSI
Unilever, SmurfitKappa, P&G, Nestlé, Crown
Europe, IFF, Novozymes, National Starch, Quest,
Loders Croklaan, Symrise, Givaudan, Firmenich,
etc
Approx. 150+ couplings covering approx. 20 countries
world-wide planned for 2006 so far
up from 6 pilots last year
Major service providers also actively involved
CPGMarket, Elemica, etc
Implementation Guide published April 2006
Implementing GUSI/UIM
Implementing GUSI/UIM is not the sole
preserve of large companies!
Can equally be applied to small organisations
- benefits are greater/costs are reduced!
Use of well-accepted process and messaging
standards will benefit every company (small or
large)
GUSI/UIM - The Next Steps
Based on learnings/success of UIM v2.2, new
workstreams are being created:
transport & warehousing
contract manufacturing
portal standardisation
e-billing (e-invoicing & e-selfbilling)
Output will form UIM v3.0
NB: these are parallel workstreams! Companies
should not wait for these to finish before implementing
UIM v2.2 - do it now! (UIM v3.0 will be backwardscompatible)
GUSI Summary
Business models defined
Standard messages available
Implementation Guide published
Companies actively implementing
Business Case
Published Soon
The GUSI Opportunity
Scaling usage across our partners
Share experience
Scaling with more trading partners
– lower costs and ease of adoption
through more standardisation
Join The Team!
Next Steps
The next meeting of the GCI Global Upstream
Supply Initiative (GUSI) Team will take place
On: 27 June, 2006
Location: Paris
Please contact Ruediger Hagedorn, GCI
([email protected]), if you are
interested in joining the meeting!
Thank You
www.gci-net.org