The Pulse -- July 2005

Unilever Runs Smarter Inventory To achieve significant inventory reduction goals and improve supply chain performance, Unilever taps SmartOps' Multistage Inventory Planning & Optimization (MIPO) solution in North America. "Our goal is to continue providing excellent order fulfillment at even lower levels of inventory. This is possible because of SmartOps multi-stage approach for calculating optimal time-varying inventory targets for every item and location throughout our supply chain," says Stephanie Beal, director of best practices, Home and Personal Care, Unilever. "Furthermore, MIPO enables us to automate the process and drive replenishment through our existing systems." MIPO enables customers to achieve both a rapid return on investment and a long-term competitive advantage by determining the best possible inventory and product availability plans given inherent uncertainties, time-varying data, multi-location and inventory stage complexities, and aggressive customer service goals of today's real-world supply chains.

Will RFID Chips Go Organic?

According to ABI Research, Silicon and other inorganic materials still rule the roost in the design of "ubiquitous networks" such as RFID systems, but printed and organic electronics have the potential to make RFID tags cheaper and antennas more effective. "RFID is the first iteration of intelligent sensor networks. There will be many additional waves," says Erik Michielsen, ABI Research. "Companies that are looking to create such networks in and beyond the supply chain must take a serious look at the printed and organic electronics market and understand where, when and how they can be applied as intelligent sensor networks evolve." So, will organic chips replace silicon circuits in RFID tags? Will printed inks replace metallic antennas? The answers will come from companies such as 3M, DuPont, Motorola and Siemens, all of which are active in organic electronics R&D. On the printed electronics side, Dai Nippon, Precisia and Xerox are leading research. ABI Research predicts products should become commercially available between 2008 and 2010. P&G To Synchronize

60% of Sales Volume

At Retail Systems 2005, Wal-Mart's vice president of Merchandising Systems, Randy Salley, praised Procter & Gamble (P&G) for the strides it is making toward global data synchronization. "They have been a leader in this space for a number of years," says Salley. "Today, it has 60,000 items registered in the Global Data Synchronization Network (GDSN)." In addition, Salley estimates that P&G will have 60 percent of its sales volume synchronized over the next 18 months. Other data synch leaders within the consumer goods space include The Gillette Company and Johnson & Johnson, the latter of which realized a 2.5 percent reduction in out-of-stocks by synchronizing 1,200 products with Wal-Mart. "GDSN is not a theory or pilot," says Salley. "Those that are participating are realizing true business benefit. You should do it because it's the best thing for your company," advises Salley.

Levi Cuts Out-of-Stocks 20%

As part a business case to apply RFID to improve store operations and optimize the value chain, Levi Strauss & Co. equipped a store in Mexico City so that every item carries an RFID tag. The project is still young, but Levi is already taking inventory more often and getting more accurate shelf data. "The numbers are encouraging," says David Bergen, CIO, Levi Strauss & Co, who revealed that the store's in-stock rates climbed from 80 percent to 99 percent -- almost a 20 percent decrease in out-of-stocks -- since pilot go-live in April 2005. Also, store employees can now take a full inventory every morning in about 30 minutes as opposed to once or twice a month. Additional pilot objectives include an increase in sales from reduced out-of-stocks; the reallocation of store labor to focus on customer service; improved inventory accuracy across the supply chain; and the ability to assist key retailers such as Wal-Mart and Target to achieve benefits from RFID.

Godiva Savors

Lower Inventories

Demand for Godiva's sweets is year round, but consumer desire peaks at holiday times. With a highly seasonal product, Godiva uses SmartForecasts from Smart Software as a critical component of its production planning. Within three years, forecast accuracy improved from 50 percent to more than 80 percent. As a consequence, Godiva was able to:

Reduce stock-outs by 3 percent

Maintain a 99.5 percent service level

Cut inventory levels by 3.5 percent, a $2 million savings Reduce obsolete inventory write-offs $400,000

Increase shipments 4.1 percent

Lowere warehousing costs $350,000 annually

The combination of SmartForecasts and the ability of production and marketing people to collaborate have been instrumental in achieving Godiva's success.