Tesco And Gillette: Shrinkage Reduction Project In Hungary

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Tesco & Gillette
Shrinkage Reduction Project in Hungary
- Zsolt Partos, Trading Director, Tesco Hungary
- Bill Cody, Country Manager, Gillette Group Hungary

Tesco Profile
• Global retailer: UK, Central Europe and Asia.
• Tesco Hungary: 21 hyperstores and 27 superstores.
• Business growth through long term customer loyalty by meeting constantly changing customer needs.
• Low levels of shelf out of stocks and customer friendly merchandising are key pillars of the Tesco strategy.
• Business goals are severely challenged by the complex problem of stock loss.
• Tesco is addressing stock loss to drive sales and improve profitability.

Gillette Profile
• Global manufacturer of grooming, portable power and Oral Care products including:
– MACH3 and Venus
– Duracell Ultra
– OralB/Braun Power Assisted Toothbrushes

• Tesco is a key customer, globally and in Hungary.
• On Shelf Availability and Visibility in retail outlets is critical in achieving category growth. Stock Loss is a barrier to this.
• In response, Gillette has invested in specialist store operations resources to work in collaboration with key customers to remove all the barriers, such as stock loss, to perfect retail execution.. Project Background
May 2001 • Stock loss levels on Gillette Blades & Razors cause major impact on Tesco P&L.
• Gillette B&Rs taken off open sale = lost sales
July 2001 • Gillette and Tesco agree to collaborative approach
• Respond with 14 day plan that addresses immediate need
Oct 2001 • Launch ECR Europe Shrinkage Project to address long-term needs

Project Objectives
•
•
•
•

Identify root causes of stock losses on Blades & Razors
Develop fact based solutions
Prioritize the key wins to implement within time scales
Specific Goals:
–
–
–
–
–
–
–

Reduce Stock Loss to acceptable level < 3%
Improve on-shelf availability and reduce shelf out of stocks
Be customer facing, satisfy their needs
Increase sales ahead of market growth
Raise net profitability
Implement solutions that are simply and easy to use
Makes procedures transparent and transferable

Project Team Structure
Tesco

Gillette

Sponsors:

Paul Kennedy

Chris Mummery
Bill Cody

Steering Group:

Dave Fenlon
Csikos Gellert

Colin Peacock

Project Managers:

Victor Jegesi

Gyorgy Ruszkovszky

M.Coulam, P.Juhasz
P.House, Zs. Partos
Steve Glasson
G.Horvath, J.Somogyi

Lilla Horvath,
R.Horling,
J.Petrovszky

Team members:
Support:

Internal audit, IT and Finance
Cranfield School of Management

Project Scope

Gillette D.C.
( P&O )

Tesco D.C.
Information Flow

Point of Sale

Methodology
Walked the process from Gillette DC to Tesco POS

Independent
Audit of results
Plan

Map & Measure

Evaluate
Wake Up !

Implement

Trialed solutions in
3 hypermarkets

Analyse
Develop
Solutions

Focused on “10 steps” solutions Identified
150 areas of risk

Solutions Implemented: The “10 steps”
• Tesco / Gillette “10 Steps” video

Solutions Implemented: The “10 steps”
• Secure ‘hot product’ Supply Chain
1. Sealed pallet from DC to outlets
2. Each product movement checked & documented
3. Products fast-tracked into secured storage locations

• Secure In-Store Handling
4. Controlled replenishment between secure storage and shop-floor
Frequent replenishment
5 & 6 Visible display location - Anti theft fixtures

• Ownership and Control of Loss
7 & 8 Stock loss results owned by in-store champion- Staff awareness
9. Ongoing control through regular stock counting (front and back of store) 10. Measure & Adjust

Effect on In-store Stock Loss
Average Weekly Losses / Units

40

30

20

10

0
During Defensive Merchandising

After ECR Project

Source:data from 3 Tesco Hypermarkets

Effect on Sales
Average Weekly
Show More

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