Lean Fulfillment Streams: Responsive Supply Chain Solutions to Optimize Order Fulfillment at the

Lowest Total Costs

• What is Lean?• How Genysis Brand Solutions has applied

lean principles.• What these capabilities mean for our

Clients.

What is Lean?

Taiichi Ohno Shigeo Shingo

Musings from a Lean Thinker

Lean vs Mass ThinkingLean Order Fulfillment Mass Order Fulfillment

Build to order Make & sell

Economies of speed Economies of scale

Effective Efficient

Pull (from customer) Push (to customer)

Small & frequent orders Large & infrequent

Quick changeover Changeover unimportant

Production cells Functional silos

Right-sized machines Big, fast machines

Fast to respond Slow to change

Adaptive Ridged, inflexible

Primary Objectives

Pop QuizWhich waste is the most egregious?

Toyota’s 7 Wastes

Motion

Overproduction

Transportation Overprocessing

Defects

Inventory

Waiting

Overproduction

Answer

The Problem with OverproductionNo Cash

New Product Introduction?

Where is My Stuff!

Insurance

Wrong Location

Cost of Capitol

Scrap

Obsolescence

Shrinkage

Transactions

Inventory & WIP Crowds the Voice of the Customer

Why?I need 300

units of A and 100 units of B!

A B C

Genysis

?

Because People & Equipment are Busy Working on the Wrong Things

I need 300 units of A and 100 units of B!

A B C

Genysis

1 Min. 2 Min. 3 Min.

Goo

d F

low

- A

Poo

r F

low

- B

A B C

1 Min. 10 Min. 22 Min.

STOP!

Error at

Step A

A B C

Catch at Step

C

STOP!

The Method we Choose Makes a Difference

Large & infrequent orders vs small & frequent orders

Lean has Enabled New Capabilities for Genysis Brand

Solutions

2014 Key Objectives

Best-in-class quality

Industry-best lead times(PO to Delivery)

1 2 3

Mission Statement: Deliver best in class nutritional brand solutions in days, not weeks

Fastest product launches

How to Achieve Short Fulfillment Lead Times?

1Re-Organize By Value Stream

2Decouple

Procurement & Production

34 Week Lead Time (PO to Delivery –

Pull System)

4Increase Fulfillment

System Velocity (Reduce Working Capitol)

Small & Frequent Orders vs. Large & Infrequent Orders

Flour is More Valuable Than Cake– Taiichi Ohno

Case Studies

Since August 2014, delivered 1.7 million bottles 100% on time in less than 3 weeks

Shipped 46,185 units 100% on time with an average lead time 3.98 Weeks

Launched 214,000 units 100% on time with an average lead time of 6.4 weeks

What These Capabilities Mean for Our Clients

Why Brands CareAs the client, why do you care about reduced lead times and how does this model translate?

100% on-time, in-spec delivery

Reduced finished good inventory

Reduced GOGS

EXPIRE

DReduced risk

of obsolescenceOrder flexibility Shorter lead-times

50%reducti

on

Product Fulfillment Partnering

o Supply agreemento Stocking agreement

o Standard lead times are 8 weekso Sub 8 week lead times may require

stocking agreementso Genysis Fast Track delivers in

industry leading sub-4 weeks

o Performed by Supply Chain Analystso Determines threats to ship dateso Develops detailed action plan

Genysis Fast Track ProgramOur Fast Track program has been engineered to meet our client’s most important needs

AFTER Genysis Fast Track: Sub 4 Weeks

PO Placement Production Ready to Ship

BEFORE Genysis Fast Track: 8-10 Weeks

5-7 Weeks 2-4 Weeks

Stocking Program PO Placement Ready to Ship

2-4 Weeks

Procurement Period

(Removes procurement Period)

8-10 Weeks

8-10 Weeks

2-4 Weeks

2-4 Weeks

Production

Genysis Fast Track ROIAs the client, why do you care about reduced lead times? How does this program translate into a real benefits?

COST % OF ADOH

Cost of capital (as % of capital ADOH per annum) 5%

Warehouse costs 3%

Inventory damages 3%

Insurance on inventory 4%

Inventory obsolescence (write offs) 4%

Inventory shrinkage 3%

TOTAL CARRYING COSTS 22%

Genysis Fast Track ROIReducing inventory directly affects the total cost of fulfillment

1 FG Unit = $10Average Inventory Units = 50,000Average Inventory Carrying Cost = 20%o Consumption = 4,000 units per weeko Ave. 8 week lead time = 32,000 Units on hando 4 week buffer stock = 16,000 units on hand

Carrying Cost: $500,000 X .20 = $100,000

EXAMPLE

Doors Open to ClientsWe want our clients to always have the insight they need into our production facility. We therefore invite clients in for audits and send out internal audit summaries