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Ashland – Valvoline Trials and Tribulations of Alternate Supply Chains. University of Kentucky 2013 Supply Chain Forum. Corporate Profile. Sales 1 - $8.1 Billion. By geography. By commercial unit. Ashland Water Technologies 21%. Ashland Specialty Ingredients 35%. Europe 26%.

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Ashland – Valvoline Trials and Tribulations of Alternate Supply Chains

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Ashland valvoline trials and tribulations of alternate supply chains

Ashland – ValvolineTrials and Tribulations of Alternate

Supply Chains

University of Kentucky

2013 Supply Chain Forum


Corporate profile

Corporate Profile

Sales1 - $8.1 Billion

By geography

By commercial unit

AshlandWaterTechnologies21%

AshlandSpecialtyIngredients35%

Europe26%

North America253%

AshlandPerformanceMaterials19%

Asia Pacific14%

AshlandConsumerMarkets 25%

LatinAmerica/Other - 7%

1For 12 months ended December 31, 2012

2Ashland includes only U.S. and Canada in its North America designation


Four strong businesses

Four Strong Businesses

1 For 12 Months ended Dec. 31, 2012


Table of contents

Table of Contents

  • Vendor Managed Inventory

  • Retail Direct Store Delivery

  • Floor Ready Merchandise

  • Seasonal Direct Store Delivery

  • Cross Docking

  • Radio Frequency Identification (RFID)

  • Pay On Scan

  • enVision (Joint Supply Chain)


Ashland valvoline trials and tribulations of alternate supply chains

Physical Product Movement

Retailer

Distribution

Center

Base Oil

& Additives

Component

Suppliers

Blending &

Packaging

Distribution

Center

Store

Transactional Data

Information Flow

Cultural Challenges


Ashland valvoline trials and tribulations of alternate supply chains

Vendor Managed Inventory

Premise: Assign Replenishment Responsibility to Vendor

Physical – Distribution Does Not Change

Transactional – Orders Still Placed at Distribution Center Level

Informational – Access Granted to Retailer Systems

Cultural – Desire to Maintain Retailer Rules vs Monitoring Performance

Retailer

Distribution

Center

Base Oil

& Additives

Blending &

Packaging

Distribution

Center

Component

Suppliers

Store

Physical

Transactional

Informational

Cultural


Direct store delivery

Direct Store Delivery

Premise: Deliver Product from the Valvoline DC Direct to the Retail Store

Physical – By Pass the Retailer DC – Ship straight from Valvoline

Transactional – Orders by Store – Retailer Receipt of Material!

Informational – Impact on Promotional Periods

Cultural – Retail Store Management and Labor Planning

Retailer

Distribution

Center

Component

Suppliers

Base Oil

& Additives

Blending &

Packaging

Distribution

Center

Store

Physical

Cultural

Transactional

Informational


Ashland valvoline trials and tribulations of alternate supply chains

Floor-Ready Merchandise – Promotional Pallets

Premise: Vendor Builds and Delivers Promotional Pallets Ready for Floor Placement

Physical – Pallets Assembled by Vendor and Shipped Ready for Display; DC Space May be Bottleneck

Transactional – Pallets Ordered and Shipped at Distribution Center Level: Accounting Must Disaggregate for Proper Reporting

Informational – Timing of Promotions Critical; Difficult to Coordinate with Sales

Cultural – Customization Leads to Proliferation;Working Capital Concerns

Retailer

Distribution

Center

Base Oil

& Additives

Component

Suppliers

Blending &

Packaging

Distribution

Center

Store

Physical

Transactional

Informational

Cultural


Seasonal direct store delivery

Seasonal Direct Store Delivery

Premise: Relieve Retail DC and Delivery Burden of Seasonal Product

Physical – By-pass the Retailer DC and Delivery Trucks

Transactional – Orders by Store – Keying Burden

Informational – Coordination with Third Party for Delivery Windows

Cultural – Retail Buyer did not benefit from Supply Chain Execution

Retailer

Distribution

Center

Component

Suppliers

Base Oil

& Additives

Blending &

Packaging

Distribution

Center

Store

Physical

Transactional

Informational

Cultural


Cross docking

Cross Docking

Premise: Pick to Store and Flow Through Retailer DC

Physical – Eliminate Retail DC Inventory Investment and Labor

Transactional – Orders by Store – by Week

Informational – Planning and Communications of Promotions

Cultural – Retail Buyer did not benefit from Supply Chain Execution

Retailer

Distribution

Center

Component

Suppliers

Base Oil

& Additives

Blending &

Packaging

Distribution

Center

Store

Physical

Transactional

Informational

Cultural


Ashland valvoline trials and tribulations of alternate supply chains

Radio Frequency Identification (RFID)

Premise: Seamlessly Integrate the Physical Movement of Goods with Information Systems

Physical – Attach RFID Labels to SKUs – Requires Change to Equipment and Process

Transactional – Potential to Automate Order Creation

Informational – Electronic Data Exchange

Cultural – Perception of Undue Burden on Vendors

Retailer

Distribution

Center

Base Oil

& Additives

Blending &

Packaging

Distribution

Center

Component

Suppliers

Store

Physical

Transactional

Informational

Cultural


Ashland valvoline trials and tribulations of alternate supply chains

Pay On Scan

Premise: Vendor Owns Inventory on Retail Shelf – Paid on Sale

Physical – Distribution does not Change – Concern over Stock Shrinkage

Transactional – Entire Focus Shifts to Sales – Scanner Data – Inventory Mgt.

Informational – Access to Retailer Management Practices

Cultural – Stretches the Limits of Trust and Transparency

Retailer

Distribution

Center

Component

Suppliers

Base Oil

& Additives

Blending &

Packaging

Distribution

Center

Store

Physical

Transactional

Informational

Cultural


Ashland valvoline trials and tribulations of alternate supply chains

enVision

Premise: Reduce Vendor Interfaces by Combining Supply Chains

Physical – Consolidate Smaller Vendors Low Velocity Materials with High Velocity Valvoline Lubricants

Transactional – Combine Orders to Achieve Freight Efficiency

Informational – Electronic Data Exchange Through On-Line Marketplace

Cultural – Issues with Trust and Native System Bias

Base Oil

& Additives

Retailer

Distribution

Center

Blending &

Packaging

Distribution

Center

Component

Suppliers

Store

Physical

Transactional

Informational

Cultural


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