Strategic Supply Chain Management - Supply Chain Online

94 Strategic Supply Chain Management
painful, costly, and risky from a business perspective, but it was absolutely
critical to success. Explains Watson, “If we had tried to do this on the side
with a small project team, it would never have worked—and we’d never be
seeing the benefits we are now.”
RETHINKING THE SUPPLY CHAIN
Avon began by creating a centralized planning function—a critical priority.
Explains John Kitchener, head of the supply chain in Europe, “There
was no way Avon would achieve its growth targets without a centralized
planning group that could see demand and inventory levels across the
region and react very, very quickly.”
First, Avon had to create a common database. The team spent many
months putting in place standardized product codes, descriptions, and other
information so that each country was speaking the same language. The
database gave Avon visibility into sales trends and inventory so that managers
could look across the region and see what was happening from both
demand and supply perspectives. The company also installed Manugistics’
supply chain planning and scheduling system to support integrated planning
and coordination across the whole European region.
To leverage this new capability and
Avon put in place a
regional planning
group empowered
to make decisions
about service levels,
inventory, and costs.
manage the growing complexity of the business,
Avon put in place a regional planning
group empowered to make decisions about
service levels, inventory, and costs based on
a bird’s-eye view of the whole supply chain.
Other decisions regarding the new organization,
roles, and responsibilities were put
on hold until later.
The next critical step was to redesign
the entire supply chain in a way that made
sense operationally. Using the Supply-Chain
Operations Reference-model (SCOR), the
team identified the key changes to plan, source, make, and deliver—the
supply chain processes that were most integral to Avon’s business. Avon
kept a manufacturing plant in Germany but consolidated other production
into its plant in Poland. This helped in two ways. First, it expanded manufacturing
capability in the heart of Avon’s emerging markets. And second,
it delivered major cost efficiencies, mainly due to the lower cost of labor.
Avon also created a centralized inventory hub in Poland—near the production
facility—to service the company’s branches throughout Europe.