04_2012_why_its_real_issue_JTupper_IGD by ECR Baltic

James Tupper, ECR Learning & Change Manager, IGD

11.30 – 11:50 Main Hall, ECR Baltic Forum (Vilnius), 8th November 2012

Who we are • • • •

Over 750 members from across the supply chain At the heart of the industry for 100 years Total supply chain perspective In-house team of 100 – Over 30 analysts with relevant industry experience

• Funding: 20% Subscriptions , 80% Trading

Our Purpose – Making a Difference • Training and development – Helping people flourish at all stages of their careers

• Skills and employment – Providing skills and career opportunities

• Nutrition and technical – Helping consumers make more informed choices

• Sustainable supply chains – Delivering environmental benefits through guidance and best practice Download our latest impact report for more information on how we deliver public benefit: www.igd.com/impact © IGD 2012

Agenda • Food and packaging waste in the supply chain: preventing it from occurring in the first place • Performance gaps and their scale. Why the gaps have grown and why opportunities to improve have not been exploited • How some in the industry are challenging assumptions, driving change, demonstrating achievements and influencing the framework within which it operates • Hard hitting case studies hot off the press from some of the most proactive FMCG - retail businesses in UK How to Improve Performance Together will be fully addressed in the special workshop from 13.30 to 14:55 in the Secondary Hall 11.30 – 11:50 Main Hall, ECR Baltic Forum (Vilnius), 8th November 2012

Sustainability: the three pillars or the triple bottom line • Labor Practices and Decent Work • Human Rights • Society • Product Responsibility

Social Bearable

Equitable

Sustainable • • • • •

Materials Environmental Viable Energy Water Biodiversity • Compliance Emissions, effluents and waste • Transport • Products and services • Overall Global Reporting Initiative Sustainability Performance Indicators

Economic

• Economic performance • Market presence • Indirect economic impacts Living within our means so future generations can meet their needs

Waste in the supply chain

ÂŠ IGD 2012

Prevention

vs. Recovery

Multipliers

(CO2e)

• How may tonnes of Food and Drink waste do you need to Recover to be equivalent in Greenhouse Gas terms to Preventing one tonne of Food and Drink waste? Prevent / Redistribute

Compost

> 8.3

Prevent / Redistribute

Anaerobic Digestion

> 6.6

Adapted from Defra/DECC’s Greenhouse Gas Conversion Factors for Company Reporting

Prevention vs. Recycling Multiplier (CO e) 2

Food and Drink Waste (Compost)

8.3

Food and Drink Waste (AD)

6.6

Glass (mixed colours)

4.1

Plastic rigid (incl bottles)

Government’s new tougher UK packaging recovery rate targets 2012 2017 Overall 74% 79% 64% Glass 81% re-melt Plastic 32% 57%

2.8

Plastic film (incl bags)

2.4

Glass (colours seperated)

2.3

Board (78% crgt, 22% crtnbrd)

2.0

Textiles

1.6

Paper

Steel Cans

1.6

Steel

* Net Benefit of Saved Production Emissions Versus Landfill vs. Net Benefit of Recycling Versus Landfill data from July 2011 Guidelines to Defra/DECC’s Greenhouse Gas Conversion Factors for Company Reporting

76% 22%

Aluminium

1.1

Aluminium cans and foil

71%

Wood

1.2

Wood

69.5%

40%

55%

9 © IGD 2012

Wasting Profit Rates as as aa % Rates % of of Sales Sales

Waste Waste

Margin Margin

ÂŠ IGD 2012

Barriers to performance improvement The potential of many underexploited opportunities for savings go straight to the bottom line are obscured because we are: • Immune to the effects on waste of our decisions elsewhere in the business or in other companies • Dazzled by spotlights on the great work to light-weight or plant-base packaging and to reduce household waste • Busy, and we have better qualified and responsible colleagues in waste and sustainability departments • Cautious to open a whole can of worms with colleagues, let alone trade partners • Busy diverting waste to avoid landfill tax and salvage some value as feedstock to recovery industries • Cautious about talking of issues that can too easily be misunderstood and damage reputations © IGD 2012

Retail Packaging 2004 - 2008

Corrugated

Plastics – Single Trip

Plastics – Multi Trip

Packaging Material Cycles Primary Manufacture

Filling

Recycle

Return / Reuse

Incineration or Landfill

Extraction

Recovery

Source: IGD Research

Secondary

Tertiary

Distribution

Retail Home

ÂŠ IGD 2012

Product and Packaging Waste 2010 • • • • • • • • • • • • • •

Customer Service Director Supply Chain Director Customer Supply Chain Manager Store Ordering Programme Manager Sustainability Manager Supply Chain Controller Customer Services Executive – Multiple Supply Chain Environment Manager Head of CSR & Corporate Affairs Fresh Supply Chain Controller Supply Chain Project Manager European Sustainability Director European Activity Management Operational Risk Manager UK & Ireland © IGD 2012

Till

Manufacturers Supply Chain

Retailers Supply Chain

Till Reduce to Clear Mark Downs

Factory In-Gate / UK Port

Supply Chain Prod & Pack Waste (tonnes, 2009)

Returns 5,275

Returns managed 243 for suppliers

Redistribution /

alternative markets

Recovery (including Dispose

recycling and composting)

Recovery (including Dispose

recycling and composting)

Sewer / controlled water course

Arrows not to scale ! ÂŠ IGD 2012

Struggling to see the Lines

ÂŠ IGD 2012

IGD Waste Targets 75,000 tonnes Prevented or Redistributed by end 2012 ≈ 5,000,000 wheelie bins

150,000 tonnes Diverted from Landfill and Sewer by end 2012 ≈ 10,000,000 wheelie bins © IGD 2012

Change-by-change reporting Drive improvement

Inspire trading partners

Identify change & impact

Get industry on front-foot

Share best practice

See how improvement achieved Inform consumers & government

Celebrate achievement

Broadsheet & broadcast coverage Gauge return on investment ÂŠ IGD 2012

2010 Supply Chain Waste Submissions 75,000t waste Prevented or Redistributed

150,000t waste Recovered or Recycled

38,000t

115,000t

ÂŠ IGD 2012

Types of initiatives of impact in 2010 The reported initiatives that prevented waste (or redistributed it to alternative markets) fell into one or more of the following categories: •

Design – of product and packaging to protect or prolong the product

•

Range – selecting a new product range to minimise waste while increasing sales

•

Forecast – to better deal with weather, new products and / or promotions

•

Measure – focusing people's attention on preventing rather than managing waste

•

Engage – engaging and motivating our teams to want to eliminate waste

•

Process – accelerating the value adding flows of material and information

12345

 • Collaborate – working better together with trading partners to prevent waste • Redistribute – via alternative markets for human or animal consumption  We also welcome reports about recovery / recycling initiatives that have diverted waste from, for example, landfill or sewer © IGD 2012

Focus on Prevention • Waste Prevention

Definition of the “Five to Drive” based on survey of the root causes of waste Design – of product and packaging design to protect or prolong the product

Range – selecting a new product range to minimise waste while increasing sales Forecast – to better deal with weather, new products and promotions Measure – focusing people's attention on preventing rather than managing waste

• Waste Management

Engage – engaging and motivating our teams to want to eliminate waste

Collaboratative Waste Prevention Toolkit

ÂŠ IGD 2012

The Five-to-Drive Design – of product and packaging design to protect or prolong the product

Marketing

Range – selecting a new product range to minimise waste while increasing sales

Commercial Supply Chain

Forecast – to better deal with weather, new products and promotions

Operations

Measure – focusing people's attention on preventing rather than managing waste Engage – engaging and motivating our teams to want to eliminate waste

Sustainability

So, how can we influence waste? Range – selecting a new product range to minimise waste while increasing sales

Design – of product and packaging design to protect or prolong the product

Engage – engaging and motivating our teams to want to eliminate waste

Measure – focusing people's attention on preventing rather than managing waste

Forecast – to better deal with weather, new products and promotions

2010 and 2011 Supply Chain Waste Submissions 75,000t waste Prevented or Redistributed

150,000t waste Recovered or Recycled

70,000t 195,000t

ÂŠ IGD 2012

On-going Performance Improvement Programme

ÂŠ IGD 2012

IGD Performance Improvement Programmes Supply Chain Waste

On Shelf Availability

Category RRP

Supply Chain Waste

31 Food Vendors 32 Consumable Vs 20 Fresh Vendors April 2010

Nov 2010

Promotions Mgt

Nov 2006

Sept 2007

Aug 2010

Dec 2010

March 2010

March 2011

On Shelf Availability On Shelf Availability

June 2007

March 2008

Jan 2008

June 2008

Category RRP

15 Food 1 Vendors 15 Food 2 Vendors 24 Heath & Wellness Jan 2011

January 2012

Easy ID

July 2008

July 2010

May 2011

Nov 2011

On Shelf Availability

Aug 2009

Dec 2009

On Shelf Availability On Shelf Availability On Shelf Availability On Shelf Availability On Shelf Availability

Nov 2003

Sept 2004

April 2005

Feb 2005

July 2005

Sept 2005

May 2006

July 2006

Jan 2007

ÂŠ IGD 2012

Waste Savings Achieved WRAP funded IGD programme 2010

Waste Prevented (tonnes)

Snacks and Cakes Promotions Mgt Biscuits and Snacks Range Mgt 12345

102

Cake Flow Through Floral Waste Prevention

Ready Meal Waste Prevention

12345

Reducing to Clear to Prevent Waste

Waste Prevented (tonnes)

Pot Noodles

Sugar Asda

Sugar Tesco

115

Cans

295

Veg Cans

Beverage Cans

Flour

Sugar Brakes

Cooked Meats

500 421

Collaborative Forecasting Supplier Waste and Dumped Stock

WRAP funded IGD prog ’11

170

Simple Changes, Big Impact • 33% reduction in manufactures waste • Up to 20% reduction in packaging • 6% improvement in forecast accuracy

Reduction in overall waste

End to End Process Review Forecast Process & Accuracy

Production Planning

Manufacturing Process

Store Process

Delivery Process

ÂŠ IGD 2012

Purchase orders

• Accuracy of estimated orders reviewed

• Frequency of order estimates reviewed • Order and production lead times were not synchronised

Improving Communication

• Communication was on a needs must basis • Communication is now joined up and proactive not reactive

Effective communication is key! © IGD 2012

Design – Secondary Packaging • Noon reduced case sizes at no on-cost to improve flow to shelf; increasing availability without increasing waste • To reduce waste at store, the case label was improved by using colour, a clearer font and by using only store-relevant abbreviations in the product description

Design – Primary Packaging • Reduced in size by 20% saving material !

• The material added no value to the consumer ! • Easier to put on shelf and fit more on the shelf ! • Clearer for customers to understand what they are buying , sales prove this ! • Easier for the consumer to shop , in store consumers told us ! • Clearly stamped on the label ‘Meal-forOne’ , or meal for 2 , No confusion ! • Why did we not think of this before ! © IGD 2012

Design – Primary Packaging • Keep meals for one in purple

• Move meals for two to clear bags to show off size better

Not the best

• Move meals for four to a box to clearly display value for money • Implement colours for different meals to make easier to shop • Rearrange levels and adjust shelf heights

What good looks like

Ready meal waste • improvement despite significant disruption Noon Ready Meal Waste at Morrisons

6000

5000

New Product Major Promotional

4000

3000

2000

1000

Week

Food waste at Noon â&#x20AC;˘ has reduced from over 30 tonnes per Month

ÂŠ IGD 2012

Performance improvement made possible by • Working together • Working together with with colleagues and other supply chains trading partners • Increasing use of proven • Building and asserting solutions, achieving understanding efficiencies and reducing prices to shoppers • Challenging the status quo • steering completely clear • Cutting through confusion of anticompetitive effects • Making small changes in behaviour & Sales Buyer Rep to designs Merchandising Marketing Sales Rep

Sales Rep

Marketing

Manufacturing & Distributions

Customer Service

MIS

A/P

R&D

Store Operations

Senior Management

Finance

MIS

A/P

R&D Senior Management

Buyer

Marketing

Sales Rep

Buyer

Marketing

Manufacturing & Distributions

Customer Service

Merchandising

Finance

Customer Service

Manufacturing &Merchandising Distributions

Finance

MIS

A/P

R&D

Store Operations

Sales Rep

Buyer

Marketing

Buyer

Marketing

Buyer

Customer Service

A/P

R&D

Store Operations

Customer Service

Buyer

Merchandising

Store Operations

Supply Chain

MIS

Store Operations A/P R&D Senior Management

Supply Chain

MIS

Store Operations A/P R&D

MIS

Finance

A/P

Planning

Senior Management

MIS

Finance

A/P

Planning

Senior Management

Supply Chain

MIS

Marketing

Manufacturing

& Distributions Merchandising

Finance

Manufacturing

& Distributions Merchandising

Finance

Customer Service

Manufacturing Merchandising & Distributions

Finance

Senior Management

Finance

MIS

Planning

A/P

Management SupplySenior Chain

MIS

Store Operations A/P R&D

Management SupplySenior Chain

Senior Management Supply Chain

Finance

Supply Chain

Sales Rep

Senior Management

MIS

Finance

A/P

Planning

Senior Management

Finance

MIS

Planning

A/P

Senior Management

Finance

MIS

Planning

A/P

Senior Management

Finance

MIS

Planning

A/P

Senior Management

How? Collaborate and • ensure actions are based on evidence; not myth & legend or gut-feel alone

Set -up

On-Board Meeting Week 1

Phase 1 Measure & Understand

• win short-term gains to motivate others to join in the change process

Progress Meeting Week 8

Phase 2 Redesign & Pilot

• deliver results and apply learnings to other areas of the business

Progress Meeting Week 16

Phase 3 Roll-out & Sustain

Evaluate Meeting Week 24

Access to reference material

IGD Performance Improvement Programmes

IGD Performance Improvement Programmes Extra, quicker, easier and more sustainable and scalable results achieved by retailer-supplier cross functional teams working and learning together

"Working with suppliers in a way that we have not been able to achieve before" "IGD’s facilitation fee is dwarfed by the benefits gained from the programme“

"I see all the people taking part have grown in themselves and their knowledge and understanding is significantly better as a result of the programme”

What Sponsors & Participants Say

"This is amazing. We have been trying to collaborate on this for years. Fantastic progress has now been made in just two months”

"No one is dominating: IGD is facilitating a ‘neutral ground’"

"It hadn’t been on the radar screen. Now we have made 110% progress and we have lots of momentum"