Posted by Dave Jordan on Wed, Jan 25, 2012
All major companies run some sort of ERP to support their business whether they are FMCG, pharma, brewing or indeed anyone who “makes stuff”. Many blue-chips have invested in big name software packages while others have gone for a cheap and cheerful locally built product. The big name offering is not always the most user friendly solution but then the made-to-measure option also has drawbacks, usually support and lack of flexibility. Anyway, getting to the point….
A discussion this week on supply chain planning had me thinking about how planning used to be done, Yes, ok go on, cue Mary Hopkin singing Those Were The Days – all young things should look it up on YouTube.
I guess at some stage before type-writers the planning process must have been largely verbal with some lowly paid scribe scratching away with a quill on paper taking down orders from salesmen. Manual addition would follow until a demand for raw and packaging materials was derived. After typing on corporate headed paper and receiving the company seal the various orders would be sealed in envelopes and posted. What sort of lead time would that process have offered? What on earth happened if there was to be a change or there was an error in the writing or – just a possibility – the sales department got the forecast wrong?
Typewriters will have improved the process a little but reliance on post would be the norm until the possibility of Telex popped up. This was still heavily reliant on manual intervention and of course the planning process itself remained rudimentary and paper based.
Communications eased with the arrival of the fax machine. At least now the lead time between order issue and receipt was a matter of minutes and changes could be made without waiting for the postman to call. Different departments could exchange information as long as a telephone line was available. Still, the task of finding and collating data would remain in the relative dark ages despite the arrival of table-sized calculators.
The computer arrives and provides a massive step forward. Now there was a bit of IT to support the number crunching process and make the order process far slicker. Software to take account of history, market activities and launches facilitated business forecasting – not necessarily more accuracy, however.
Move ahead only a few more years and we have suppliers, producers and customers fully integrated with common IT, processes and data. Collaborative planning gets partners proactively working together for a common goal rather than being defensive and protective of their individual silos. Producers can see when a consumer buys their product at what time in which store and at what price – they probably know their names via the loyalty card scheme too! Salesmen know when shelves are empty and can send orders in real time from hand-held devices.
Technological innovation has brought planning a long way since the 1800’s and there is undoubtedly more to come. I wonder what is next. So, while you tap away at your ERP interface spare a thought for how planning was carried out at times when a PC was a London Bobby, having a Wii in your living room was unacceptable and an iPad was still just a typing error. Start singing Mary.
Posted by Dave Jordan on Mon, Jan 23, 2012
This seems like déjà-vue all over again! Only a handful of working days into the New Year and I am hearing the same old complaints about the economy and business in general being poor. Of course this is true and does not look like changing any time soon. However, there is one new recurring theme which popped up at various parties and gatherings over the holidays; “my company seems to do nothing different and just hopes business will improve”. Not going to happen, no way! Certainly learning by your mistakes is a powerful message but banging your head against a brick wall for what is approaching 4 years is a rather pointless and painful experience.
Those companies that identify failings and shortcomings in their supply chain AND do something about them will be best prepared when we exist recession. Exit we will but I have no idea when
I published a list of potential supply chain resolutions a year ago. I know some people did pause for thought and then take decisive action and it is no coincidence they now have growing businesses. Growth in the current global economy? Yes!
Based on client feedback and analysis of “before and after” performance I list the same resolutions in order of short term impact on operational quality. If you have limited resources then choose from the top of the list.
- Route To Market – Has the march of the International Key Accounts stalled? Distributors may still be a large chunk of your business and they are capable of growth if you help them. Give your RTM a thorough service and your Distributors will serve you better.
- Sales & Operational Planning - If this is in place great, but there is no doubt you could improve it. If there is no S&OP you should try it! If you are not yet a believer of S&OP, try “What has S&OP ever done for us?".
- Reduced Stocks – the start of the year is a great time to remove that old stock. Why not give your sales a boost with some unexpected and low cost support using stock that will be otherwise written off? I detect numerous companies have “encouraged” stocks into the trade for year end and only the residual stock disposal operations will benefit.
- SKU Complexity – Did you study your complexity in 2011? Do you have any idea what complexity is doing to your business? Understand your sku complexity and check if it appropriate for your business.
- Improved Customer Service – A number of major global companies still do not measure CS to any degree of accuracy. Companies that fool themselves on Customer Service rarely succeed.
- Proactive 3PLP’s – Are they meeting the agreed KPI’s? If they are then perhaps you need to review them and revise them upwards, again and again.
- Sales & Marketing Buy-in – This is still a problem, I fear. If only everyone in your company was aligned to the same plan and 100% mutually supportive. Think what sort of competitive edge that could provide.
- Use the ERP - Avoid spreadsheets like the plague! They undermine your business and waste time and effort. If you are considering a fresh implementation of an ERP then chose a partner with experience in the field. I mean real operational experience and not bought-in fresh out of university “experts”.
- Continuously Improve – If you are in the same position in 12 months time then you will be dropping towards the back of the pack and will be ill equipped to ride the crest of the post recession rally. Keep innovating and improving your Supply Chain.
- Supply Chain Awareness – I was not sure where to place this resolution but I leave it as a very important number 10. There is more to supply chain than trucks and sheds - Supply Chain is all about.
Check out the top 5 and then find an expert partner to lead you through the process of change for good. Don’t be in the same position this time next year; do something.
Posted by Dave Jordan on Fri, Jan 20, 2012
Post Christmas I have been taking a look at IKA retailers and seeing how they are coping in the current economic squeeze. One question came to me after seeing well over 20 outlets of various retailers. What do they all do with all that chocolate and other confectionery?
The same scene is present after Easter. Shelf after shelf and gondola after gondola of seasonal chocolate in all sorts of formats, shapes and sizes. Not simple packaging either and it must cost a fortune to pack a 15cm tall ‘chokky’ Santa into a multi-coloured coffret pack. To be fair it is not just one manufacturer who has suffered a forecasting blip, every single major name chocolate producer appears unable to get it right. For all of them Christmas must be a peak period and one that can make or break the year end results and with no time left to remedy any sales deficit.
Of course, nobody wants to disappoint consumers and run out of stock at those peak periods but how can they afford the apparent over-stocking? If the goods are on consignment or “sale or return’ then I can perhaps understand why retailers let displays hang around for several weeks. Even then I doubt the retailers would relish wasting sales space on Easter themed chocolate into June and beyond.
Considering the power retailers have over producers I do not understand why stock is allowed to gather dust on shelves. Certainly, for many foodstuffs the listing contracts will contain clauses to withdraw stocks but usually only when the sell-by date approaches.
What is the destiny of chocolate Santas and bunny rabbits after the sell-by date arrives? You cannot do much with it, can you? You cannot send it to a sink market in another country and with the vast majority of edibles you cannot recycle the stuff into fresh production as you could with washing powder, for example. If you have to write-off stock you have to pay to have it destroyed professionally and you frequently have to pay VAT on the value as if it was a sale.
Whatever the destiny of all that yummy goodness it is indicative of a lack of rigour in forecast and/or sales expectations. Diverting some investment from stock that does not sell to taking a long, hard look at your Sales & Operational Planning (S&OP) process could offer a very rapid pay-back for the companies willing to break the chocolate mould.
Posted by Dave Jordan on Mon, Jan 16, 2012
Ok, now back on line after the holidays and some demanding project work. One of the first catch-up meetings I have had this year was with an FMCG MD. No name of course, but this is a medium sized player with a broad European base and I have disguised the identity to protect both of us.
I recall how many companies plodded along with what we now accept as supply chain functions lost amongst other departments, e.g. buying and logistics in finance, planning with sales – I am so pleased that the latter is no longer the case! Many years passed before all these essential elements of supply chain were brought under one department. Looking back it hardly seemed like rocket science but it was a painful process as empires were dismantled and recognition given to what is still an undervalued function.
Although many were dragged kicking and screaming into the newly created function there is no doubt those companies operating an integrated supply chain have seen huge benefits over many years. Nothing happened overnight of course, as slowly but surely blue-chip companies made massive strides in cost, efficiency, service and innovation. Is it naïve to believe that supply chain is now considered equally important as say finance or those darlings in sales?
So, you could imagine my jaw dropping when I heard from Mr no-name MD that this company has taken the decision to dissolve the supply chain and relocate elements across the other departments. The SC Director role just vanished off the top table in one fell swoop. There must be a leading edge reason for this bold and brave (yes, insert “crazy” and “stupid” if you wish) move and I waited for the disclosure of the divine inspiration.
There was none. The insight behind the decision was that the company wanted more control over various areas of business and believed that a dispersion of roles would achieve this. The fact that segregation of roles is necessary for auditable control and accountability has been at best over-looked.
Why would you make such a decision? Answers on a post card please as this one beats me. I am not suggesting supply chain development has finished and we have the ultimate design (far from it) but reverting to an 80’s model in an effort to improve control seems to be a contradiction.
Image credit: Super hq Wallpapers
Posted by Dave Jordan on Tue, Dec 20, 2011
Ebenezer Bruise, a miserly, cold-hearted CEO, who continues to berate his Supply Chain people even as Christmas approaches. As far as Bruise is concerned every problem in the company is caused by Supply Chain. He rejects a Christmas dinner invitation by muttering under his breath that the food would not arrive on time and the meat would be pigeon instead of turkey. In the whole company his is the only desk free of Christmas cards but full of corporate gifts he has kept all to himself.
This is a man who does not like the last quarter and particularly the year-end. Bruise knocks over snowmen and even boos when he passes the charity brass bands collecting money in the snowy street. His favourite past time appears to be shouting at his overworked Supply Chain Director, Bob Planit. Bob has been a loyal employee for reasons nobody seems to understand.
That night after putting his three-legged cat outside in the sub-zero conditions Ebenezer Bruise climbs into bed to sleep. Ordinary people may count sheep to get to sleep but for Bruise he counts the number of people he has dismissed from the company. When he reaches three figures he falls into a deep sleep while snoring like a pneumatic drill digging into concrete. During the night, Bruise’s former Sales Director Jake Barley, dead for seven years, visits him in the form of a ghost. Barley's spirit has been in suspended turmoil since he died one day before payment of his annual bonus as punishment for being consumed with working in a Sales silo and sniping at other departments, especially Supply Chain. Barley has come to warn Bruise and provide the opportunity of saving him from the very same fate. The warnings will be delivered on time in full by three visiting spirits.
Bruise falls asleep and into snoring oblivion once again and wakes up to find the Ghost Of Supply Chain Past, a small, elderly man not unlike Mr Bean. The Bean-like Ghost uses his I-Pad 6 to show Bruise scenes from history that follow Bruise's career development from a young boy with a clutch of A levels. The scene shows Bruise, lonely but with the potential for happiness, to a young man with the first traces of ignorance and ambition that would deny love and real friendship in his life. Surprisingly, Bruise shows tearful emotion when studying the images and seeing his former self. An indication of the effect this spirit was having was that Bruise had not cried since school when he sat on a chair full of drawing pins in the Physics lab. The collective guffaw of the class is still fresh in his mind.
Bruise returns to his pneumatic sleep and almost immediately he is awakened by the Ghost Of Supply Chain Present. This spirit has but a fleeting time on earth and quickly shows Bruise several local scenes of Christmas joy and charity, then with a slide of a finger down the screen shows him into the Planit household on the I-Pad. The Ghost informs Bruise that unless the future is changed, the Planit’s crippled yet good-hearted young colleague, and lodger, Jolly Tall will die from stress and overeating carbohydrates in an impoverished diet. Finally, ragged boy and girl misty figures float out from beneath the Ghost's robes. The Ghost introduces them as Ignorance and Ambition and warns Bruise to beware of both in equal measure.
Again; to deep sleep but not for long. The quiet, black-clad Ghost Of Supply Chain Yet To Come takes the place of the other ghost. The Alice Cooper-like figure shows Bruise several scenes of people discussing someone's dismissal yet no one seems upset by the departure. Indeed, every single person in the vision seems overjoyed and happy with the news. Bruise does not yet realise the identity of the unfortunate person. He learns that Jolly Tall has sadly died after developing pneumonia through a hole in his shoe rather than the expected mal-nutrition. Bruise finally discovers that he is the one who has been dismissed and whose departure has only pleased people. Through misty eyes Bruise pleads that these scenes of the future can be altered, and vows to incorporate the lessons of the past, present, and future ghosts into his adoption of the Supply Chain Christmas spirit.
Bruise wakes up back in bed and realises that the whole adventure took only one night and it is now Christmas Day. The snow is falling and Slade can heard bashing out their 1970’s Christmas anthem in the distance. Wrapping up well, Bruise brings the cat inside the thaw and walks into the town. On his way to the office he smiles and shakes hands with to everyone he sees, bringing started looks upon their faces.
He sends a large turkey to the Planits, gives a sizable donation to the charity worker he previously insulted, and has a wonderful time at Fred's party. The next day he gives Planit a raise. Bruise continues his kindly ways after Christmas, befriending everyone and becoming a second father to Tiny Tim, who does not die. He never sees the ghosts again, but he keeps the spirit of Christmas alive in his heart as well as anyone.
Image credit: HikingArtist.com
Posted by Michael Thompson on Fri, Nov 25, 2011
I have been talking to a number of supply chain executives during the last few weeks and something of a theme has emerged.
The theme is the need for highly skilled supply chain resource, available at short notice, with the flexibility to switch off the resource at will ….and at fee rates comparable to exiting resource. “So nothing unreasonable there”, I thought.
What we actually discussed was supply chain interim management and how the placing of a specific skilled resource can have a dramatic impact on an organisation. We went on to discuss the typical roles that supply chain executives are currently demanding.
With this and our recent experience with clients, I offer the follow 10 supply chain interim management roles:
- Resource gap Bridging a gap prior to a full time appointment being made. This was mentioned by everyone – “we need a planning manager …. urgently”
- Backfill. To temporarily backfill a position because the incumbent manager is about to be seconded to a project. “We have a large project that has started (SAP projects were mentioned a number of times) & we need an interim Head of Supply Chain”.
- Project Managing a specific project that would normally be carried out by company personnel but resource is a constraint. This is a common need and mentioned frequently.
- Temporary or part-time operational assignments the need for which will end, do not justify a full time employee or are designed to coach and train a new manager.
- Holding the fort in a situation where company strategy is not decided and operational roles are unclear.
- Crisis Managing a crisis when a unexpected event occurs, e.g. dismissal, death or unexpected departure.
- Post-acquisition or merger management prior to establishment of the full management team.
- Pre-sale management of a company or business unit in preparation for a sale.
- Urgent change management of strategy, cost structure, organisation, process etc., when an external threat is recognised. e.g. sudden loss of market share, unsustainable debt position, hostile take-over bid, etc.
- Turnaround management or ‘company doctor’ when a permanent position is inappropriate or the role may be perceived as too risky to attract a permanent candidate.
My discussions were with a relatively small number of people. I would welcome any further comments.
Posted by Dave Jordan on Thu, Nov 24, 2011
Christmas is coming so who better than Slade to suggest you give S&OP as a present to your business?
Are you looking at your sales chart on the wall? 
Is it the time you have to stop the fall?
You’ve tried overpaying salesmen,
You’ve loaded up the trade
Do you need to find a better way?
Chorus:
So here it is S&OP
Everybody should run one
Look to the future ; how?
Six months or even 1.
Are you guessing how much you’re going to sell?
Are you suffering high out of stock as well?
Does supply chain always tell you, pre SOP is best?
So why not work together for a test?
Chorus:
So here it is S&OP
Everybody should run one
Look to the future ; how?
Six months or even 1.
What will the salesmen do
When they see their targets being met?
Ah ah
They’ll be changing the chart gradient on the wall.
Not for them will sales fall and fall.
When you implement S&OP you make quite a change
Looking back the old way will feel so strange
Chorus:
So here it is S&OP
Everybody should run one
Look to the future ; how?
Six months or even 1.
Posted by Dave Jordan on Mon, Nov 21, 2011
I published this some time ago and have just realised I did not follow up with the answers! Here they are, inserted in red text.
People working in modern FMCG, Pharma Supply Chain use a whole host of initials and acronyms to get through the day. Warehousing, planning, customer service, logistics and route to market all have their share of “SC code”. Some of this must sound like a foreign language to non-SC people and I guess it is really. You can have a conversation about a specific issue and Sales and Marketing will not understand what you are saying! Sounds like a good idea to me.
Let us see if we can expand on the Supply Chain language theme with these anagrams:
Physical pun – every company needs one to get stuff from A to B. Supply Chain
To an appalling, insane loser - present in the best companies and led at CEO/Chairman level. Sales & Operational Planning
Coin rugs – ensuring you have the necessary raw and POS materials, for example. Sourcing
Trash! Vitriolic dodgy strippers – love them or hate them you need a reliable one of these. Third Party Logistics Providers
Cry, accuse or a fact - you must have it by SKU and not by brand. Avoided by Salesmen. Forecast accuracy
Unrelenting proper increases – many brands of this available. Glues all your decisions together. Enterprise Resource Planning
Snappy ‘n’ pulling – making sure the quantity of goods you need is allocated to factories. Supply Planning
Fine, democratic nosy parker – if you do not measure these you do not improve. Key Performance Indicators
Conversions of maggot's mud – the “stuff” sold by some of the world’s biggest companies. Fast Moving Consumer Goods
Tacky, unsocial, rotten inane –powerful retailers. International Key Accounts
True verse comics – forget about this and nobody buys your. Customer Service
Torture to make – how you reach the shelf either in IKA or Traditional Trade (TT) Route To Market
How did you get on?
Posted by Dave Jordan on Thu, Nov 03, 2011
I am not going to pretend I wrote this blog “again” but when I came to sit down and look at the last quarter of 2011 I could not really see any difference from last year. The same challenges are clearly there and what is astonishing is that the same companies as last year are still making short term and expensive efforts to “get the numbers”. What folly; instead of pouring cash in to a black hole without return why not divert some of this hard earned cash to sort out the underlying problems? When the economy does recover those companies that had the vision to be critical of how they do business will be the winners. All the others will simply be loading the trade….again and again.
Ok, the third quarter is behind us and results will be available soon. In any event you will have a good feeling for how things have gone in Q3 and what is still needed in Q4 to reach the numbers you committed to over 12 months ago. Committed may well be the wrong word as you were probably forced to accept figures you knew would be difficult if not impossible to achieve. However, for the greater corporate good you took it on the chin and said “yes, we will do it”.
Exactly how are you going to achieve those seemingly distant numbers? The corporate world is indeed still firmly in recession but so are consumers. The two groups are not disconnected; consumers are having a very tough time considering the increasingly clueless government austerity measures that continue to drip out around the globe. Consumers simply do not have the money to prop up your annual plan and what money they do have is likely to be rationed to be sure of a reasonably happy Christmas. Remember, consumers owe you nothing!
One thing you will be doing whether you like it or not is to fall into the trap of month-end loading. Let us consider this scenario which is far from uncommon even in “blue-chip” FMCG companies. October sales are poor for the first 2 weeks and then the word is given to “push” stocks into the trade. Discounts are given, favours called in and hey presto! the required target is achieved and you think you are back on track.
You have pushed so much promoted stock into the trade that distributors are short of cash and Key Accounts platforms are overstocked. Consumers do not drink more beer or wash their hair or eat more snacks because you sold at a discount. They have taken advantage of your offers and have filled their own domestic warehouses ready for Christmas.
November. This time sales are poor into the third week and the rallying call to push does not seem to be working. Support budgets are raided again and yet more stock is pushed into places where it has no demand. Despite this, the motivation of achieving targets and securing a bonus ensure that the right number is flashed to HQ at the end of the month.
Ok, just December to get through……even if it is really only a 16/17 day month for selling. You are so close that a few more discounts and the promotion of high value sku’s means you end the year on target. It’s a champagne moment, get the cigars out!!!!
Think about what you have just done for the sake of kudos and bonus. You have turned the operation of the company upside down, contravened numerous policies, abused S&OP (if you use it) and unfairly stretched your staff.
If you are brutally honest you will know you have sold January’s demand over the last quarter of 2010. You will not get away with that for long as it will come back to bite you eventually!
Posted by Dave Jordan on Tue, Oct 25, 2011
We are now into the final quarter of the year. Very few companies will be cruising along nicely and looking forward to the year-end results. If you did not review your Route To Market Distribution network and tasted sustainable success then some would describe this as “madness”!
With due reference to the original lyrics by Madness 
FMCG, Pharma too
Salesmen not sure what to do
Stretching targets to be met
No sales bonus do they get.
Distribution is a mess
Though some do try to impress
What we try always fails
What’s to be done to raise sales?
Oh, what poor sales we had
With our sales team going mad
Then we found a tool
Showing how to change the rules
What poor sales we had
Distributors weren’t all bad
Now we know the ways
To raise the volume of their sales.
Investing in a full review
Use a tool to check, we do
Evaluating every one
A short project and it’s done.
Now we know who’s good and bad
Focussed effort can be had
Helping them achieve their best
Soon to take share from the rest.
Oh, what poor sales we had
With our sales team going mad
Then we found a tool
Showing how to change the rules
What poor sales we had
Distributors weren’t all bad
Now we know the ways
To raise the volume of their sales.
Now we win in RTM
Competitors, all of them
Struggle now to make the grade
Thanks to changes that we made.
Route To Market, sorted out
We know what it’s all about
Work with partners; win the cup
Back on track and sales are up.
Oh, what poor sales we had
With our sales team going mad
Then we found a tool
Showing how to change the rules
What poor sales we had
Distributors weren’t all bad
Now we know the ways
To raise the volume of their sales.
Route To Market, Route To Market, Route To Market
Route To Market, Route To Market, Route To Market.
I hope you enjoyed singing along. You might also like to tune in to these other supply chain creations:
Image credit: HikingArtist.com