咨询管理战略组织项目麦肯锡工具评估 BJS-4307-00236-04-02.ppt

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1、-1-HenkelRoland Berger&Partners-International Management ConsultantsBarcelona Beijing Berlin Brussels Bucharest Budapest Buenos Aires Detroit Dsseldorf Frankfurt Hamburg Kiev Lisbon LondonMadrid Milan Moscow Munich New York Paris Prague Riga Rome So Paulo Shanghai Stuttgart Tokyo Vienna Warsaw Zuric

2、hImproving Efficiency of Henkel Tianjin Ltd.Logistics Workshop Henkel China DetergentBeijing,November 13,2000BJS-4307-00236-04-02-2-HenkelThis document was created for the exclusive use of our clients.It is not complete unless supported by the underlying detailed analyses and oral presentation.It mu

3、st not be passed on to third parties except with the explicit prior consent of Roland Berger&Partners.Content PageA.Internal analysis shows cost saving potential of up to RMB 1,4 Mio 3B.Current logistic system has to be modified to support future development of Henkel detergent with higher service l

4、evel 17C.Increased investment in RDC model will help Henkel strengthen its logistic power and raise customer service 34D.Case Studies48BJS-4307-00236-04-02-3-HenkelA.Internal analysis shows cost saving potential of up to RMB 1,4 Mio BJS-4307-00236-04-02-4-HenkelCost reduction potential in current lo

5、gistic system of finished goods in TJ Henkel amounts to around RMB 1,4 Mio p.a.Cost reduction potential from transportation is about RMB 310Cost savings administration/staff reach around RMB 190Reduction of warehouse space due to operation acc.to safety levels is around RMB 440The steep invoice curv

6、e has no impact on logistic costHenkel needs to increase the transparency and accuracy of information in logistic systemInterests savings from releasing capital of redundant stock will be RMB 480 BJS-4307-00236-04-02-5-HenkelNearly ninty percent of the logistic cost of FG goes to transportationSourc

7、e:Henkel ChinaLogistic cost structure of TJ HenkelRMB,000 per yearTotal logistic costTransportation cost logistic dept.Transportation support sales dept.Trucks cost sales dept.Staff and administrationWarehouse 243961543230602448265280463%13%10%BJS-4307-00236-04-02-6-HenkelCost reduction of transport

8、ation inside the logistic department accounts for up to RMB 307 p.a.Cost reduction of transportation in logistic department RMB 000 per yearThe source of cost cutsSource:Henkel ChinaCurrent situationPossible situation-2%A savings of RMB 120,000 p.a.*will occur if the short haul transportation to the

9、 commercial warehouse is eliminated and the preorder“problem is solved”A saving of about RMB 187,000 p.a.*will be generated if return freight are used and the rate of long distance transportation drops from RMB0.5/km/t to RMB0.4/km/t only in Yunnan*RMB1.55/km/t x 10km x 650t(stock transferred/month)

10、x12=RMB120900*RMB78000(long distance trans.Cost)x 0.2 x12=RMB187200BJS-4307-00236-04-02-7-HenkelWide spread use of return freight and stable shipment limit cost reductionPrice cut in long distance road delivery is hard as return freight are widely usedActual daily delivery curve is relatively flat,s

11、o it is impossible to negotiate lower prices,with intermediaries Hard to reduce short distance transportation cost by self delivery in THDRailway rate is not negotiable and rising slightlyBack-upBJS-4307-00236-04-02-8-HenkelThe whole logistic cost of FG will be 0.8%lower by reducing the cost of FG s

12、taff and administration*The productivity of logistic staff for FGSavings from increased productivity per staff per year RMB,000Source:Henkel China*:According to organization till October,there are 49 FG staff in TJ Henke*RMB1200(salary without insurance)x 13 x12=RMB187200 per year*:According to the

13、cost of the first nine months this yearTon dispatchedPer monthPer staff-7%0.8%of total logistic cost*BJS-4307-00236-04-02-9-HenkelThe possible sources of cost reduction from FG staff costPossible reduction of FG staff costThe sourcesSource:Henkel ChinaCurrent situationPossible situation-13THD will n

14、ot need 8 stamping workers if platen is used instead of stamp.Furthermore,stamps will not be used in near futureTHD will not need 5 people for battery recharging since Forklift drivers can be taught to do it by themselvesTHD can keep the insurance for all these staff and send them to the manufacturi

15、ng workshop*According to the organization chart of October this yearBack-upBJS-4307-00236-04-02-10-HenkelPreorder stock not shown in SAP causes incorrect data price accounts for an average of around 25%of total stock The actual and SAP month-end inventory of FG in TJ Henkelunit:tonSource:Henkel Chin

16、aJan.Feb.MarchAprilMayJuneJulyAug.Sep.Sold productsSAP inventoryTotal40734199426544485587601249655634554779%21%90%10%70%30%78%22%83%17%70%30%74%26%62%38%68%32%*preorder=ordered,but not deliveredincorrect dataStock above safety levelExcess warehouse spaceBJS-4307-00236-04-02-11-HenkelThough operating

17、 according to safety stock allows a rent cost reduction from warehouses by more than 50%or RMB 440 p.a.,this only reflects 1.8%of total logistic cost Cost reduction from warehouse per yearBy not using TJ commercial warehouse(average monthly rent space is nearly 3000 m2 this year),it will save about

18、RMB276,000 per yearReducing the warehouse in Yunnan from 5400m2 to 3700m2 will save RMB163,200 per year-55%Source:Henkel ChinaRMB,000ActionBJS-4307-00236-04-02-12-HenkelStock reduction will save nearly 60%or RMB 480 of the interest paid for the working capital of finished goods in TJ HenkelAbout RMB

19、 120,000 interest income per year by releasing working capital of preorder products:1277t x RMB4000 x 0.002(half month interest rate)x12=RMB122592 per yearAbout RMB 360,000 interest income per year by releasing working capital for dead and normal stocks:1890t x RMB4000 x 0.004(month interest rate)x1

20、2=RMB362880 per yearTotal savings:480,000 RMB per yearThe savings from stock in Henkels warehouseSource:Henkel ChinaSafety stockPreorderOver safety stockOccupation of FG warehousing spaceBJS-4307-00236-04-02-13-HenkelThe steep curve of invoices at the end of every month actually have no effect on sh

21、ipment performance and logistic cost as shipment is very stable throughout the monthSource:Henkel China THD daily FG dispatch and invoice volume in SeptemberService providers express they have no problem with the dispatch curveStaff in logistic department do not find trouble with the dispatch curveH

22、enkels distributors refuse to accept large volume of production at the end of the monthInvoiced(ton)Dispatch(ton)0-200200600400280030002671BJS-4307-00236-04-02-14-HenkelThe rate of orders dispatched on time is high in TJ HenkelSource:Henkel China Rate of orders dispatched on time in logistic departm

23、entBack-upBJS-4307-00236-04-02-15-HenkelBy concentrating efforts in logistics,TJ Henkel will have a chance to reduce cost of FG by RMB 1.4 million RMB p.a.Logistic cost reduction by each section RMB000 per year*not including saving of RMB 480 of financial costs for stocksTotal current logistic costT

24、ransportation cost reduction logistic dept.Cost reduction staff and administrationCost reduction warehouse Optimized logistic cost24,39643918730723,463*-3.9%*Source:RB&P analysis BJS-4307-00236-04-02-16-HenkelThe transparency and accuracy of information in the logistic system needs to be raised to i

25、mprove operationsAs RDC has not been connected to SAP system,sometimes the data input in SAP system(according to emails sent from RDC)is not accuratePreorder stocks not shown in SAPInformation regarding complaints from clients may be lost or ignored within Henkel information system.The result is cli

26、ent dissatisfaction.As clients have no rigid requirement on leadtime,there is no routine report of accurate leadtimeInside companySince Henkel does not provide its first level distributors information concerning direct delivery to their clients in time,the first level distributors are inconvenienced

27、Henkel has a problem controlling the information of backhaul delivery,because more than 25%of backhaul drivers do not send back arrival forms Outside companyInformation problemBJS-4307-00236-04-02-17-HenkelB.Current logistic system has to be modified to support future development of Henkel detergent

28、BJS-4307-00236-04-02-18-HenkelKey to achieve market penetration has been shifted to second level wholesalersMarket situation and competitiveness require Henkel to strengthen its logistics service with even stronger measures to acquire market shareCurrent logistics service level is not competitivePre

29、sently Henkels logistics cost is the lowest relative to their competitorsThus increasing logistics investment and redesigning logistics system is essential to Henkels future developmentHenkel should strengthen its logistics service to support business development in futureBJS-4307-00236-04-02-19-Hen

30、kelB.1.Providing excellent logistic service directly to second level wholesalers is crucial for Henkel to improve competitivenessBJS-4307-00236-04-02-20-HenkelConsumers of detergent in China have low brand loyaltyDue to high purchase frequency and low price,detergents have a random purchase characte

31、risticBecause of low brand loyalty,consumers will easily switch their brand choiceRandom purchase detergent toothpasteDedicated purchase Real estate CarHighLowHighBuying frequencyPricePurchase character MatrixAnalysisBJS-4307-00236-04-02-21-HenkelDeep market penetration and strong advertising are tw

32、o essential ways to acquire market shareAdvertisement creates high purchase incentive for consumer to try new brandDeep market penetration raise the products availabilityConsumers with low brand loyaltyAllows aggressive players significant gains of market shareGrowth of market shareYear24%1366.7%71.

33、3%WhitecatLibaiQiqiangSource:Roland Berger&Partners analysisBJS-4307-00236-04-02-22-HenkelKey to achieve market penetration has been shifted from first to second level wholesalers.Get closer to end userQuicker response to changeable marketTighten market controlAvoid direct competition in first level

34、 wholesaler and go directly to second level wholesaler which is a larger competition scenarioStructure ReasonsfactoryFirst level wholesalerSecond level wholesalerRetailerConsumerCity level 600Town level17,000FocusSource:Roland Berger&Partners interviewBJS-4307-00236-04-02-23-HenkelOver 300 branches

35、support Qiqiangs fast growthQiqiangs branch coverage1)(over 300 branches)Market share of QiqiangBack-up1)major branchesSource:Roland Berger&Partners analysis,AC Nielsen retailing audit4120577771010996661251415561391BJS-4307-00236-04-02-24-HenkelLibai market penetration in Sichuan is very successful

36、with strong increase in number of wholesalersLibais market share and No.of wholesalers(1999)Jan-FebMar-AprMay-JunJul-AugSep-OctNov-DecNo.of wholesalersMarket share2109Source:Roland Berger&Partners analysis,AC Nielsen retailing auditBJS-4307-00236-04-02-25-HenkelMarket situation and competitiveness r

37、equire Henkel to strengthen its logistic service with even stronger meausres to acquire market share 2 nd wholesalers is the key to achieving market penetrationSome players have achieved success through providing good logistic service to 2nd wholesalers HENKEL limited access to 2nd wholesalers no co

38、mpetitive logistic servicesHENKELStrategic turning pointNo change Losing competitiveness losing market share Establishing competitive edge Fast market penetration Acquiring market shareProviding excellent logistic service to 2 nd wholesalers.BJS-4307-00236-04-02-26-HenkelB2.But current logistic syst

39、em will deter Henkels expansion strategy and impair its competitivenessBJS-4307-00236-04-02-27-HenkelRealizing its weakness in market coverage,Henkel has proposal an aggressive expansion strategy for the next few yearsRelative low market coverage especially in rural areaLoose linkage with second lev

40、el wholesalersLimited logistic serviceBuild up customers confidence through stable prices and reasonable marginsOffer focus promotions on 2nd wholesalers and retailersFocus on key accountDirect delivery from lst distributors to 2nd wholesalers at county levelStrengthen logistic network to achieve se

41、rvice requirementCurrent problemsProposed reactionBJS-4307-00236-04-02-28-HenkelExpansion strategy should be fully supported by higher logistic service for 2nd wholesalerHigh market penetrationStrong channel controllWide market coverageDirect shipment to 2nd wholesalerContinuous replenishmentQuick r

42、esponseMore frequent deliveryHigher capability of order processingShorter lead timeMoving down to 2nd wholesaler means.It will be implemented by offering.It requires higher logistic service with.BJS-4307-00236-04-02-29-HenkelThough Henkel has a cost advantage in logistics it pays with lower service

43、level than successful competitorsHighLowLowHigh1)Service level here is defined with delivery frequency and lead timeSource:Roland Berger&Partners analysisService level 1)Logistics cost in%of salesHenkelLibaiQiqiangBJS-4307-00236-04-02-30-HenkelPresently Henkels logistics cost is the lowest compared

44、with other competitorsComparison of logistics cost in%of saleComparison of logistics cost in RMB/tonSource:Henkel China,Roland Berger&Partners analysis%of salesRMB/tonLogistic costs after 1st deliveryBJS-4307-00236-04-02-31-HenkelCurrent logistics service is not competitive in terms of delivery freq

45、uency and lead timeDelivery frequencyAverage lead time*:Weekly van sellingSource:Roland Berger&Partners analysisTimes per monthDaysBJS-4307-00236-04-02-32-HenkelWith the increase of direct shipment,service quality and logistic cost will be more problematic if current logistics system is not changedD

46、irect shipment customersLogistic cost/service quality curve(not quantified)+130.8%Logistic costMore long distance direct shipmentBackhaul is not enoughService qualityLonger lead timeNo.Of direct shipmentCostSource:Roland Berger&Partners analysis,interviewBJS-4307-00236-04-02-33-HenkelSelect new logi

47、stics modelRedesign logistics networkInvestment in logistic system to deliver excellent service to 2nd wholesalerThus,increasing logistics investment and redesigning logistics system is essential to Henkels future development BJS-4307-00236-04-02-34-HenkelC.Increasing investment in RDC model will he

48、lp Henkel strengthen its logistic power and raise customer service BJS-4307-00236-04-02-35-HenkelRDC model is most suitable of the three logistics options which are effective in delivering good service to 2nd wholesalerLeverage model is not reliable for Henkel to deliver qualified customer serviceAd

49、option of OEM model will face problems of both product quality and capacity utilization of Tianjin factoryRDC model can support Henkels ambition,but it requires higher investment in logistics systemBJS-4307-00236-04-02-36-HenkelC.1.Three successful logistic options in China detergent industryBJS-430

50、7-00236-04-02-37-HenkelThree logistic options are effective in delivering good service to 2nd wholesalersThree successful logistic optionsRDC model“Qiqiang”Leverage model“P&G”OEM model“Libai”BJS-4307-00236-04-02-38-HenkelOption(1):RDC model can provide strong force for market penetrationStructureMor