LOGISTICS 2009

•February 8-11, 2009 ∙ Gaylord Texan ∙ Dallas, Texas

Driving Supply Chain Performance
Leveraging Fact-Based Decision Making for
Continuous Improvement

Steve Wegleitner
Director, Vendor Operations – Target Corporation

Ian Ricketts
Director, Operational Excellence – Unilever US
 “Let’s work the problem people.
Let’s not make things worse by guessing.”

Gene Kranz
Apollo 13 Flight Director
Agenda

• DMAI2C Approach
• CAPDo Approach
• Key Phases
— Objectives
— Methodology/Tools/Concepts
• ASN Match Improvement Project
• Results
• Key Messages
Target – 6SIGMA Approach

DMAI2C is all about measurement , facts, and improv ements

IMPROVE /
DEFINE MEASURE ANALYZE CONTROL
INNOVATE

¤ What is the ¤ How big is the ¤ What are the ¤ What ¤ What is the
scope of opportuni ty? root causes changes will plan to
the problem? of the eliminate the ensure the
problem? sources of problem does
the problem? not return?
Unilever – CAPDo Approach
Document
Benefits

Kaizen Charter
12. Define Future Plans
Begin a
11. Standardize the New Cycle
Improvement
Were
No C
Objectives 1. Identify the
Yes Losses CHECK
Obtained? 2. Select and
Justify the
Subject
10. Verify the 3. Understand
Results
Do 12 Step
the Process &
Equipment
9. Carry Out
IMPLEMENT
Counter- Kaizen 4. Grasp the
actual situation
measures
Method (Phenomenon)
8. Propose
Counter 5. Establish the
P Measures objectives
7. Perform Root
PLAN 6. Make a Work
Cause Analysis
A Plan

ANALYZE
Key Phases

Charter Define Scope D

C Data Collection M

A Determine Root Cause A

P Innovate Alternative Solutions I2

Do Drive Sustainability C
ASN Match Improvement Project
Phenomenon: Unilever is not consistently compliant with Target
95% ASN match requirement
Key Phases

Objectives of this phase:

Define Scope
1. Identify specific problem /
opportunity and cost
Data Collection
2. Identify current process

3. Identify customer
Determine Root Cause requirement s
4. Identify deliverables

Innovate Alternative Solutions

Drive Sustainability
Scope
Problem / Opportunity and Cost
Problem Statement

What Where When Who Which How

5W1H
Goal Statement

S M A R T
Specific Measurable Attainable Relevant Time Bound
Scope
Current Process
BOSCARD
Charter
Product or Service Impacted: Target ASN Match Rate Business Unit: Customer
EDI 856 Supply Chain

B Project Manager:
Project Champion:
Merle Oelke
Ian Ricketts
Phone Number
Expected Project Savings $

Background Start Date: 04-16-2008 Target Completion Date

Element Description Team Charter

1. Process in which opportunity Target’s Unique Shipment Receipt Unilever and its 3 rd Parties are not consistently meeting

D O exists.

2. Project Description
Scheduling Processes

Eliminate defects in processes

Target’s Vendor Requirements for advance shipping notices
to accommodate Target shipment receiving processes.
Improve process reliability to achieve an
Deliverables Objective contributing to the Target defined
and measured “ASN Match Rate”
adjusted match rate that qualifies Unilever for
Vendor Certification (currently 95%, 3 mo.
Ave.)
3. Objective: Achieve Vendor Certification at Project Baseline GOAL Entitlement units
Target by exceeding requirements Y’s
(currently a 3 month 95% match
rate)
4. Measurable variable(s) Target-measured ASN Match Rate Metric 1 %
The “Statistical Problem”
5. COPQ $0.50 per case on non-compliant Metric 2 $/A
Cost of Poor Quality PO’s. Annualized non-compliance
penalties (based on last quarter of
BOSCARD 2007) of $537,000 deducted from
Trade Funds
Metric 3 units
Charter
$.04 per case for Target if they fail
to qualify for LEAP savings /A
6. Business Cases: Unrealized LEAP supply chain Primary Metrics: ASN Match Rates for HPC, Slim Fast, and

R S Expected financial improvement

or other justification.
efficiencies & Reduced Trade
Funds stunt growth opportunities
and impair competitiveness
Foods

Secondary Metrics:

Risks Scope Qualifies more Unilever shipments

for ART unloading.
Not increasing work-around, manual processes in lieu of
automated processes.

7. Team members & Roles:
6. Project Scope:
In scope & out of scope
7. Benefit to External
Customers:
Merle Oelke, Mark Matthews,
David Piehl, John Sandusky, Shruti
Sinha, Suzanne Pascarelli, Hillary
Schiff, Julie Pierce, Jessica Grippo
Out of Scope
Non-Target ASN’s; Analysis of
Unilever EDI/ASN HPC model
Target Processes, ART barcode
(Who are the final customers, what
are their key measures, and what
benefits will they see?
Customer Supply Chain
Customer Support & Data Mining
Transportation & Distribution
e Business, Supply Chain IT
In Scope:
3PL delivery of 856, Analysis of carrier processes,
inconsistencies in the processes, scorecard failure reasons for
all Unilever businesses, 3rd party processes, proximity timing
1. Sub-optimal POS due to supply chain inefficiencies
created at Target DC’s
2. Improved Cost of Goods Sold by qualifying for LEAP

A C
3. Increased availability of trade funds that would otherwise
be used to pay ASN fines

8. Schedule: Project Start April 21, 2008

Constraints
Give the key milestones/dates.
Assumptions
9. Support Required: Will any special capabilities,
hardware, trials, etc be needed?
Scope
Customer Requirements
Relationship Map

Vendor Carrier

ASN

DC Headquarters

Vendor
Operations Distribution
Operations
Logistics Inbound
Transportation
Scope
Deliverables
Voice Of Customer

• Potential for sub-optimal POS due to supply

chain inefficiencies created at Target DC’s
when ASN’s fail.
External
• Improved Cost of Goods Sold by qualifying for
Unilever efficiency incentives.

• Gain visibility / understanding of current

ASN match
Internal • Identify potential avenues to increase
ASN match score
Key Phases

Define Scope

Objectives of this phase:

Data Collection 1. Identify what to measure

and why
2. Determine dat a plan
Determine Root Cause
3. Gather baseline data

Innovate Alternative Solutions

Drive Sustainability
Data Collection
What to Measure and Why
Cause & Effect

Cause-and-Effect / Fishbone Diagram

P rocess Pro duct P ro d uct P eo p le

Carr ier s
MDG I te m Se tup Dispatcher s
BOLby DC Multiple PO
Trucks"BOL IT
F ormat
POL I te m
Setup"re ceipt Dr ivers
agnst bad PO U nscannable DC 856 setubp by
3PL"item setup CPU
860Process
Whs Overa ges
Par tial PO List RTS"BOL #
latePOchg Picking/LoadingErr or s
Pr ov
MC&BA's
A SN M atch
F ailure
LTL Timing Manual ove rr ide
Fede x

Proximity DC's Whs Overa ges

ma sterbilling
Tgt DC's Tar get Pre- sched
CPU
Reg DC's carr ie rs/ scheduling

856 Timing"PG I
3PL DC's Tra ining
Timing"3pl set- up of 856

P ro cess P lace P rocess

Data Collection
Data Plan
Collaborate and collate

Partners on line SAP

(POL) Target Unilever

Collaborat ion
Drill down into Target Excel data files
systems

Validate Validate Validate

(Target) (Unilever DC) (Carriers)
Data Collection
Baseline Data
Process Map
Key Phases

Define Scope

Data Collection

Objectives of this phase:

Determine Root Cause 1. Identify causal
relationships
2. Determine primary drivers
Innovate alternative solutions

Drive sustainability
Root Cause
Causal Relationships
5 Why

ASN Match rate is not high enough

#1 Why?

Failure / error at Target DC Failure at 3rd party DC Bill Of Lading Error

#2 Why?

Late ASN ASN Never Arrived

#3 Why?

Creation time of
System downtime
appointment
#4 Why?

Other than midnight

Midnight or 17:00, PRD
or 17:00
#5 Why?

Some DCs are pre- Some DCs require

scheduling loads training
Root Cause
Causal Relationships
Cause / Effect

Cause-and-Effect / Fishbone Diagram

Process Product Product People

Car rier s
MDG Item Setup Dispa tcher s
BOLby DC Multiple PO
Trucks"BOL IT
For mat
POL Item
Se tup"r ece ipt Drive rs
agnst bad PO U nscannable DC 856 setubp by
3PL"item setup CPU
860Process
Whs Overages
Pa rtial PO List RTS"BOL #
latePOchg Picking/LoadingErr ors
Prov
MC&BA's
A SN Match
F ailure
LTL Timing Manual over ride
Fedex

Pr oximity DC's Whs Overages

master billing
Tgt DC's Target Pr e-sched
CPU
Re g DC's ca rrier s/scheduling

856 Timing"PGI
3PL DC's Training
Timing"3pl set-up of 856

Process Place Process

Root Cause
Causal Relationships
Loss Tree

ASN Match failure

Invalid BOL Late Unscheduled Never arrived

30% 37% 17% 16%

Target DC
Carrier sending
“Pre-scheduling”
Invalid BOL
Appointments
51%
91%

Warehouse sending
EDI 856 Sent Late
Incorrect BOL
9%
35%

Multiple Shipments
For 1 PO
3%

Backhaul Carrier
Sending Incorrect
BOL
6%
Root Cause
Primary Drivers
Data Display

Unscheduled SCAC Breakdown

7000
100
6000
80
5000
# of POs

Percent
4000 60

3000
40
2000
20
1000

0 0
SCAC A A BB E C F r J ar L r K r M her
ns r r D ns
r r r r a
C o Ca a
C CoCa CaCa C a C C Ca C a Ot
# of POs 2063 941 545 498 466 454 297 295 239 198 178 130 216
Percent 32 14 8 8 7 7 5 5 4 3 3 2 3
Cum % 32 46 54 62 69 76 81 85 89 92 95 97 100
Root Cause
Primary Drivers
Data Display

Vendor A

250

200

150
# of POs

Auto Matched
Late
Total
100

50

0
0 - 50 50 - 100 100 - 150 - 200 - 300 - 400 - 500 - 600 - 700 - 800 - 900 - 1000 +
150 200 300 400 500 600 700 800 900 1000
Distance Range
 10
20
40
50

30
60
70
80

0
55
1
55
2
Root Cause

55
3
55
4
Data Display

55
5
55
6
55
7
55
8
Primary Drivers

55
9
56
0
57
8
57
9
58
0
58
7

DC
58
8
58
9
Target

59
0
59
3
59
4
38
01
38
02
38
03
38
04
38
06
38
08
38
09
Late
Total
Auto Match
Root Cause
Primary Drivers
Box Plot

Boxplot of EDI 856 Match

100

80
EDI 856 Match

60

40

20

0 1
VICS
Key Phases

Define scope, problem, and goal

Data Collection

Determine Root Cause

Objectives of this phase:

Innovate Alternative
Solutions 1. Evaluate possible
solutions

Drive Sustainability 2. Select best solution

Alternative Solutions
Possible Solutions
Loss Tree

Loss Tree Analysis results

Invalid Errors - Unilever
Carriers
Invalid BOL Carrier BOL
30% of total 51% • Specific carriers and
Prioritize Unilever DCs impacting invalid
Warehouse BOL BOL identified
35%
• Counter-measures plan
developed

Late Errors - Target

Target DC
Late Pre-Scheduling Prioritize
• Specific Target DCs identified
37% of total 91%
• Action plan developed
collaboratively
Alternative Solutions
Best Solution
Filtering Matrix

SOLUTION FILTERING MATRIX

Low

3
EFFORT

1
High

0 1 2 3 4 5 6 7
Low IMPACT/BENEFIT High
Key Phases

Define scope, problem, and goal

Data Collection

Determine Root Cause

Innovate Alternative Solutions

Objectives of this phase:

1. Institutionalize improvement
Drive Sustainability
2. Implement ongoing
monitoring
Sustainability
Institutionalize Improvement
Implementati on
Executed
controllable actions

Prioritize, Plan…
TAKE ACTION (Do)
Invalid Errors –
Late Errors - Target
Unilever DCs & Carri ers
• Training delivered for DC employees
• Training packets for Carriers and DCs
• Pre-scheduling was eliminated
• Plan to address labor churn
• Plan to address labor churn
• Progress tracked weekly. Repeated errors
were quickly identified and addressed • Progress tracked. Issues addressed

Monitor, replicate, celebrate, continue to improve

Sustainability
Ongoing Monitoring
Visual Controls

Unilever Revised Scores 2008-07 2008-08 2008-09 2008-10 2008-11 2008-12

Revised PO Appointments 1,950 1,768 2,281 2,006 1,574 2,238
ASN Matched POs 1,845 1,662 2,090 1,944 1,540 2,126
ASN Match % 94.6% 94.0% 91.6% 96.9% 97.8% 95.0%

Start of joint
collaboration
Results

The Value of Collaboration – Tangible results

Unilever ASN Match Rate at Target 2007 - 2008

• FI team kick off

110
ASN Match Rate %

100
90
80 Goal
70 HPC
60 Foods
50
40
30

2007 - 2008
Key Messages
Toolkit

Define Determine Root Drive

Scope Cause Sustainability

Relationship Map Pilot

Goal Statement Solution Selection
Process Map
Voice of Customer S.M.A.R.T.
Control Plan
Potential Root Cause Diagram 5 Why
Run / Trend Chart Visual Controls
Loss Tree Data Display
6 Hats
Pareto Chart
Fishbone Filtering Matrix
Data Collection Plan Box Plots
BOSCARD Problem Statement

Data Innovate Alternative

Collection Solutions
Key Messages
Enablers of Success

• Apply Resources where Needed

• Listen to Stakeholder(s )

• Laser Focus

• Open Minded / Curiosity

• Ownership / Alignment of Multiple Players

Across Supply Chain
Key Messages
Value of Collaboration

True 1+1=3
Innovation Synergy

Partnershi p

Common Objectives

Trust and transparency

Questions