Electrolux China “Network Strategy” Project,Final Report Presentation Beijing, March 10, 1999,Project Introduction and Background Customer Survey - Survey Approach - Survey Results - Findings and Opportunities Logistics Network - EOQ inventory modeling - Logistics network modeling Recommendations and next steps Appendices - Process flow - Cost analysis,Contents,Major Brands Market Share in 1999,Electrolux Objectives,Reduce working capital,Increase turnover (through greater product availability),Reduce operating costs,Electrolux China has committed to achieve Best Practice Service and Cost, as basis for rapid business growth,high inventory carrying cost,in-store stock-outs,too many warehouses: limited inventory and service control: SOP systems and procedures for inventory control are not systematically in place/applied limited know-how and support unclear responsibilities and performance criteria,Electroluxs supply chain objectives., are to improve current performance., to deliver real bottom line benefits,Electrolux China has identified supply chain improvements as one of its corporate priorities to improve customer satisfaction and cost performance.,Satisfy requirements of target customers (better than competition),Achieve full control of the entire logistics process,Limited visibility and control, appropriate perforrmance criteria not in place,Likely gaps in service satisfaction. Required Service Levels and competitors position are not measured,The overall objective of Electrolux China Network Strategy Project is to optimize the distribution network configuration in terms of: - Meeting customer service requirements; - Achieving minimum costs; and - Controlling the entire outbound logistics process.,Increased Revenue - Improved product availability and promising capabilities - Scalability to meet future business requirements. - Improved responsiveness to market conditions. - Optimized fill rate capability. - More flexible, responsive delivery options - More value-added services. Reduced logistics costs - Improved end to end supply chain visibility - Lower cost-to-serve in transportation and distribution Improved asset productivity - Fewer stock locations through rationalization to achieve higher network productivity Reduced working capital - Lower LDC stocks through more flow-throughs, smaller more frequent orders, centralized slow movers, better use of supplier stocks etc.,EXPECTED RESULTS,PROJECT OBJECTIVE:,The overall objective of Electrolux Network Strategy Project is to determine the least cost distribution network configuration to satisfy the specific service level requirements of its current and future target customers,Project Objective and Scope The scope of the Network Strategy Project is to answer the following questions:,What are the customer service requirements which impact channel design, logistic process and infrastructure? What is the current performance (performance measure and customer satisfaction) of Electrolux in meeting these requirements and what is the GAP versus the competitors as well as against the “Best Practice” achievable in China? Should Electrolux provide inventory carrying and transportation services to our clients (with appropriate price increase)? What other additional logistic services can provide competitive advantage to Electrolux in the market place? Should Electrolux change the structure of its distribution channels in China (e.g. sales to retailers, vs to distributors?) Can Electrolux gain by plant direct shipping? How many distribution centers (DCs) should Electrolux have? How many RDCs and LDCs? Where should the DCs be located? Which types/location of customers and which branch should be served by each DC? Which customers should be served directly? Should all DCs carry all products or should they be specialized by product line? Should Electrolux contract for warehousing services or operate its own DCs? What impact do different transportation modes have on Electrolux logistics network requirements? What inventory control procedures (high level) should Electrolux establish in order to satisfy customers, minimize cost and maintain control? What are the systems and human competencies requirements to achieve these objectives?,In developing the optimum supply chain capability for Electrolux China we are utilizing a three-phased approach to developing and rolling-out the new distribution network - This project covers only Phase I,Overall Approach towards Network Optimization,Build Logistics Model,Task 5,Assess Alternatives,Task 6,Conduct Review Sessions,Task 7,Present Results, Recommen- dations & Implemen- tation Action Plans,Task 8,Conduct Visioning Sessions,Task 1 a.,Initiate Data Collection,Review Current Operations,Task 2,Under-stand Service Require- ments,Task 3,Initiate Detailed Project Planning,Task 1,Task 4,Full-Scale Implementation Rollout,Phase I,Phase II,Phase III,Distribution Network Process Design,Distribution Networ