Helping a Southeast Asian supermarket chain shift to a new way of working

Background

FMCG (Fast-Moving Consumer Goods) and retail in Southeast Asia are dynamic and rapidly growing sectors that cater to the diverse and evolving consumer needs of the region.

The diversity of Southeast Asian markets poses both opportunities and challenges for FMCG and retail businesses. Each country within the region has its unique cultural, economic, and regulatory considerations. Companies must navigate different consumer preferences, distribution networks, and regulations to effectively penetrate and operate in these markets.

Our client is a Southeast Asian supermarket franchise that was founded in the 1970s. In 1989, they carried out an IPO (Initial Public Offering). Five years later, the client operated 56 supermarkets. They then began to open additional niche outlets. At the beginning of our collaboration with the client they were operating 634 stores with over 15,000 employees.

Our initial analysis found the following issues and constraints in the client’s distribution centre (DC) and across several of their stores:

1. Ineffective re-buying/replenishment processes resulting in overstock, understock, and the wrong stock holding levels.
2. Absence of supplier management processes and ownership resulting in low supplier service level agreements (SLA).
3. Inconsistent ‘quality standards’ in Goods-In and Merchandising allow sub-standard stock into the business.
4. Ineffective Let-down processes driving low pick attainment and excuses not to pick.
5. Absence of route delivery cycle times result in low fleet utilisation and congestion at the staging and loading bays.
6. No ownership of transported goods by drivers/vendors, leading to bad practices and opportunity for shrinkage at point of transfer to stores.
7. Delays in issuing paperwork result in large numbers of vehicles loaded and waiting.
8. End-to-end DC SLAs/order processing timeline were not defined, resulting in a small two-hour window to plan the transport and loading operations.
9. Multiple purchase orders are generated by different parties with inadequate communication, leading to multiple orders and excess stock being delivered.
10. Actual stock on hand vs. system stock showed inaccurate inventory results.
11. Poorly defined product classifications with poorly executed min/max calculations result in erratic ordering patterns, driving up both out-of-stock and excess stock conditions.

Project Approach

Following the results of our analysis, we worked together with the client on a 38-week transformation project. The project kicked off with our Focus Process® for the first 16 weeks, followed by a 22-week implementation period. By combining our consultants with six full-time task force members from the client’s side. we installed and implemented a variety of solutions.

During the implementation process, participants were first given classroom training, followed by one-on-one coaching on the shop floor. The task force team allowed for a more effective cultural buy-in, necessary for the sustainability of the project outcomes. It also helped us to overcome linguistic and cultural challenges.

Project Implementation

The primary targets for the project were to improve the DC SLAs to all 634 stores nationwide, and to improve stocking control & re-ordering of the top 1000 SKUs at store level. With these objectives in mind, it was important to encourage buy-in and ownership.

To ensure this outcome, the project team spent the first 16 weeks identifying opportunities for improvement through process mapping, management control system (MCS) mapping, and workshops. Fundamental processes were critiqued to identify areas for improvement, and the MCSs were reviewed to detect which key elements of the system were missing or ineffective.

The project governance was structured so that all issues and concerns were reviewed and raised in weekly meetings. The steering committee (consisting of the top management from the client’s side) met regularly to review and drive the project. The President and CEO of the client organisation chaired the meetings.

“Renoir’s approach of planning, organising, and implementing an assignment is well structured and deliberate. Our people have gained the know-how to systematically approach a project. This has been made apparent now that some task force members have been assigned to lead other in-house projects.”

President Director

Key Results